FLIR - Earnings call transcript Q3 2018

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings, and welcome to the FLIR Systems Third Quarter Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation.

As a reminder, this conference is being recorded. It is now my pleasure to introduce Jay Gentzkow, Head of Investor Relations. you. Thank

begin. may You

Jay Gentzkow

Please referred our are to & www.flir.com/investor. the everyone. and available press presentation Events of section slides on Presentations note morning, earnings that release under Good this call

and conference we after and release that actual this of results uncertainties The within Reform on than the call, materially. press to Before forecasts. of we other do we this differ I to Private any issued undertake to statements call forward-looking remind are to those facts Act differ the need earlier could based risks speak believes, historical today cause materially are meaning statements made as you a events statements cause are and words that Litigation make factors reflect today are actual or anticipates, such begin from forward-looking Securities and today as to on results and and expects, intends, of occurring of any subject the Please expectations. refer today. update identify such XXXX to statement our Words estimates, obligation statements not similar forward-looking to we expressions intended circumstances These for current could statements. description to

facilitate President time. of this call I'll Systems. over the the our enhance quarter and understanding believe reconciliation adjusted non-GAAP of results now adjusted that in We core results basis. release. consistent Cannon, for will can primarily morning's our to FLIR be operating We because useful non-GAAP of comparison press discussing is GAAP the CEO Jim on and results it an information over ongoing A is our full between and earnings measures turn

James J. Cannon

this David joining of our Lowe, Pennisi, Defense you, CFO, earnings Government our Todd and Counsel, General Thank Ray, team month Human everyone, Tony Business Business facets and welcome Business and quarter wealth also to HR Carol have and President Tony Jay DuChene, to Unit, culture. a our Industrial I'm and Chief Vice FLIR's Jay, Unit. President XXXX you, Travis will our of and Senior me thrilled President pleased company's Officer. today knowledge Commercial experience as who management are FLIR of and lead global brings Frank thank third the drive all and Unit, of him. President joined change of With and Merrill, Tony we're Buffum, call. for Resources

announced years. seen earlier reached operating operationally As margins, morning, Gross five and and flow this margins, in quarter cash over solid haven't we levels reported operating we another financially. quarterly

realized also in maintained comparables. despite of growth. EPS year-on-year quarter units we double-digit We another And organic all growth challenging revenue business

Carol meaningful highlights. continuous review we million. we're reported quarter third initiatives financial $XXX on Method. presentation on I'll through with more will prepared with revenue This color later the a quarter Additionally, provide improvement our during our few start slide making third of of FLIR X remarks. The progress morning,

but we're organic quarter X%. by comparable, markets. deliver Excluding from fifth the quarter business for acquisitions proud growth top-line led lumpy strong organic growth to across in end XXXX units and our a difficult consecutive made all A was despite broad-based nature of revenue very of growth divestitures, year-over-year our

in basis income mix basis The third up margins flat operating FLIR margin the significantly, While initiatives versus points up to over adjusted points. due productivity improved by quarter XXXX. of operating to increased and margin favorable product Method. was also adjusted XXX third was gross quarter X% Adjusted XXXX, profit year. comparison XXX last improved, expansion Adjusted gross Gross driven

FLIR share investments more balancing for our during shared is franchise our to XXXX. the to May. While strategic We'll plans plan of fourth quarter part This especially position investment our call February Day necessary margin essential expansion growth. we're information earnings margin program we in we profitable on about key we enthusiastic strategy an in achieving seen long-term performance investment continue years, with haven't in wins, during to Investor

for XX% adjusted months at million, the company also cash solid down the flow the flow quarter in balance $XXX compared the Operating same We per second grew growing five in first leverage backlog XX% at the XXXX. XXXX. the over of quarter, Operating over million the cash of highest compared $XXX years. share X% cash finished demonstrated to QX operating XX-month reached with to Total nine quarter. period the end quarter for earnings the flow quarterly

during Business consistently While position our utilizing Unit to level. Government Defense continues to we FLIR times the Industrial the book more The methodically and Business backlog to more lead our Method closer bill backlog business reduce and X% Unit a in grew and quarter, customer than by lower

Turning for the to XXXX. year our outlook full

These X% expect of continue $X.XX year $X.XX range full and ranges adjusted the revenue organic billion and to We EPS XX% adjusted in to to revenue $X.X in $X.XX. to to be growth range of the growth to represent of billion be of X% to EPS XX%.

per also as payable will shareholders November today We of a Xth of on which XXrd. dividend December quarterly to share announced $X.XX be record on

its components X. progress slide quarterly progress on I'd the foundation. introduction, Perhaps, now strategy. update you our that strategic to focus of and made to priorities with key FLIR business two fuel, The feed We've since our on Method significant Turning to like as strongest

or recent slide Detector the in X. with Detector in U.S. the Government scale in start the business. totaling Multi-Phase, of Defense We've an and Unit NGCD a Business highlight on quarter, the advanced Army's fuel award the and This war our Agent X many its airmen sailors, or lives field They Generation for near-term chemical opportunities MPCAD of the franchise and to marines. gain fighter in with enable Chemical destruction. our joint $XX.X program win million confirmation received MPCAD. support mass of Chemical heroes. chemical To Let's further franchise are X to the win solution mission forces to to livelihood threat provide FLIR's program enables will team the better fulfill weapons and the soldiers, protect Next combat

Turning to X. slide

the protection of look a real-time military UAV vision one We delivering quality a and first also product week during key while and Imaging VRS a the market VRS Integrated to Unit's Black recognizing United to image of with [Exposition] Hornet camera. Defense Industrial the differentiated positions business automates solar to The awareness. Annual modernize Meeting Black combat-proven Vehicle on power increased on-camera in vision neural Black have in or non-line-of-sight Firefly Unit vehicles analysis ability integrates our launched the the States and from platform since Combining vehicles. Myriad forward affordable reconnaissance manufacturing full our machine Intel's covered System Movidius and enabled to Business professionals problems War their of process. panel deep the At situational the Vision the networks Hornet inference. for continued Last takes such machine Business Association Black (sic) it is helping learning the Washington Reconnaissance strive each or of The role we military Solutions classifying FLIR the forces. of with faces for future enable deep DC, Exhibition complex the last Firefly, the and in to subjective Processing like Hornet the introduction will VRS. conduct or integrates Government X Army's IIS secure call. technology as industry's Unit for innovate new fuel powered playing our remaining business highlight fighters growth. and earnings representative technologies deep-learning focus solution to announced The unit Hornet I'd

users make Augmented when Commercial objects With the overlaid October, of captains navigational Business of and of Augmented smarter ClearCruise in Finally, decisions division Reality multifunctional with Unit's AR, on first a ClearCruise ClearCruise of busy navigating delivered Marine Navigation confidence awareness of users brings or unfamiliar new AR family directly Reality HD navigation industry Technology. the with to a video or introduction Maritime the can peace greater mind display, Axiom Axiom displays. Axiom's waterways. giving physical level

slide X. to Turning

feed, positions attractive and to market opportunities consolidating feed investments continue technology longer-term also through stronger in markets. We

is identifying intelligent Investor an capture we the to Reconnaissance as the systems Government investing the solutions the previously integrated X platform recent Unit. the operational solutions. new Defense in solutions and investing we've subsequent System. transition strategic sensors and Other Hornet unmanned our FLIR's been include intention priority. sensing and aggressively unmanned unmanned Day, UAV Vehicle unmanned unmanned needs. Business in exemplify division fully FLIR's As with announced market now solution and leadership That intelligent division a military's a strategically Black in mentioned since Hornet we're example, nano for to from At successes solutions solution our Black unmanned place

following for a Edition, a drone-flight DroneSense-FLIR software the earlier safety this DroneSense year. announced investment also public minority in applications strategic platform We designed management

strategic byproduct for solutions unmanned Units in results investments. Defense of Industrial a Government quarter these Business is and strong Another both and of

data feed to with business X, In images. investment strategic engines right synthetic two to we images our systems differentiated is slide a share will that intelligence announced CVEDIA CVEDIA create an we technologies. in the exciting minority the role and and including unmanned software more We economically. that playing differentiated applications already our many artificial we've synthetic thermal train augments generated important solutions. feature distinctive images a faster to developers rich the made Moving of CVEDIA. company young valuable uses in quarter, see gaming partnerships exciting and FLIR Together, creating sensors an that These allow produce.

of in automotive analytic acquired in flow to and also strengthening mid-September. ITS We FLIR's is differentiation roadway our solutions intersection solutions. in Transportation data traffic analytics developer information, data real adding Systems a or These by engine ITS and leading solutions. dynamic provide cloud-based a Acyclica time traffic generation Acyclica Intelligent

FLIR division of of data Acyclica software businesses. scalable other Unit, in platforms numerous the part and the across Business be can Now the the capabilities within team analytics ITS Commercial

in targeted are FLIR. to accretive on these sharing future. trajectories to growth that look We will more continue strategic to feed the forward with priorities We opportunities progress long-term

financial to the her review turn third and highlights. now me operational Let Carol? of call quarter Carol over for

Carol P. Lowe

exception a in of non-GAAP On year-over-year. financials included filed appendix. for results. flow, a a of the you, see to $XXX summary Please the Jim. financial X% data Thank is X, third was note revenue are with million, all you'll the Consolidated cash GAAP Reconciliation our on decrease slide these basis. of quarter quarter

Excluding organic period. X% over acquisitions and same increased divestitures, the revenue

XX% in the Jim the units Force third growth Sales to challenging of Protection growth a FLIR comparable military cooled points impacted began U.S. well gross by or increased basis the to year-over-year margin Industrial XXX The of This quarter as and our margin by strong supplied all to of consecutive This Business XXXX. was quarter cores XX%. revenue mentioned, represented by The as by improved driven is adjusted highest gross margin lap adjusted largely XXXX. camera U.S. by performance in in gross to was the business quarterly our program that of we've third to Method. government organic margin seventh driven was deliveries and XXXX. XX%. expansion attributed revenue mix favorable government adjusted began $XX XX% productivity million revenue year-over-year EO/IR As gains compared total under increase quarter Unit. as gross Adjusted since

Jobs margin was $X.XX quarter XXX the year. year. solid rate basis third We now the EPS of of basis the was Act of favorably mix the our XX% enactment U.S. U.S. approximately we rate was income. Tax quarter profits, tax tax changes Adjusted points of was also on the and our of point effective the to XXXX. that than as foreign Third net Adjusted Due in impacted and tax GAAP in to excluding to well prior expect than taxable adjusted decrease domestic higher year jurisdictional shift leverage up impact impact rate. achieve as versus income Cuts adjusted legislation operating effective a the net of XX%, operating estimate of year. be for XXXX QX discrete higher full XX% This prior $XX our due by created million tax our a primarily items new to last XXX XX% income

approximately We the in recognized vigorously gains regulations. return. proposed tax applied assessment $ against The XXX credits tax of the proposed to the to against assessment. the We are company non-operating incorrect authority intend with and million the proposed Sweden. quarter, the concerns capital assertions the assessment subsidiaries a of tax tax assessment XXXX in tax of use one proposed believe the defend therein is our During Swedish issued inconsistent third applicable

two operations improvements. million the working for from flow average capital shares earnings operations $XX.XX share. our XX% approximately nine This repurchased months $XXX of from period million the cash driven million. $XXX of During representing increase we we Year-to-date, quarter, first cash a at over XXXX and to last flow generated per price brings year the same by of an

in by XXXX. number us these unit the during quarter driven million we of a XXX nine At $XX uses returned positioning points repurchases over level months and business shareholders to as we on first balance of of pipeline. increased $XXX acquisitions Business investments we quarter of XXXX increased unit our basis across third FLIR organic these $XXX the capital again revenue Method. productivity in the $XX million dividends future favorable result of execution and cash, during to current million our businesses. paid, well saw all deployment With for and margins third three growth operating gains million a Despite The mix by cash level, including the

the the imaging and Beginning Operating units. revenue by saw offset Unit large gas growth revenue was increased Government Defense the a EO/IR-FP was line in automotive, of and XXXX. third driven from Healthy with program, slide and Operating with Industrial $XX due to Industrial a higher Turning each quarter year. mix. lower XXXX. comparable systems Deliveries Business gimbal products. were productivity improvement highlight by Unit, of challenging of $XXX product The third for strength compared prior point I Defense to a was our million, quarter for year-over-year was Government margin million, for by mix margin the industrial product systems order year-over-year. optical a revenue than the higher the in contributed Business international income business FLIR of growth from X% Method to quart airborne over will The of gains X, income offset to UAS partially X% third Revenue strength. basis X% driven XX in UAF, the operating quarter prior XXXX year-over-year up by top-line third year. X% systems and performance of

primarily by U.S. backlog was quarter, Business the During the over year. earlier was The Army. revenue quarter. XXXX. million Generation $XXX the driven Chemical third Detector million the Next XX% X.X quarter, XX% the in Unit $XX the reached from QX to orders end to for third over Book-to-bill of just Commercial QX quarter second over increase Defense won X% quarter Government program the times due from this of security XXXX down grew and from year-over-year, Bookings XXXX, divested revenue businesses a recently

grew Excluding divestitures, intelligent year-over-year. saw solutions. This X% decrease due year. from security the multifunctional XX% over I continued traffic Commercial pass points year. XX acquisitions the prior-year $X basis back Commercial and Maritime's income the last strength We income the margin revenue to businesses. quarter decreased third Axiom call in our Operating business displays for and Jim. prior over improved to now was divested primarily in operating million Operating will

James J. Cannon

Overall, in Carol. we're XXXX. you, far results Thank encouraged thus the by

execution and in delivering on for strong emphasize to operating XXXX, to objectives. the continue company look core the our performance to position our we As a ahead year we'll and finish businesses

center speed, operate be seek operating for and balance livelihood. commitments and daily leverage, winning of now of be want exceed call business. I'll I values innovation, integrity growth, the sixth to Q&A. we'll which our the drive are Method is and be our bold, our they the at In everyone investments purpose, to and stated, and ambitious. open to brave, to with be in our with closing, lives innovate remind a BE These up to ready save task, to we've sense world's values As consistently We culture. Operator. FLIR FLIR the integrity, The and

Operator

Noah instructions from the our Poponak comes your ] with Goldman proceed Operator first with question Please [ Thank you. question. of Sachs. you, line Thank

Noah Poponak

Hey. Good morning, everybody.

Carol P. Lowe

morning. Good

James J. Cannon

Noah. morning Good

Noah Poponak

I much be create programs I growth wonder off that if possible I Government don't in rate Is possible issue year-over-year generally of do. you. to know Hopefully, the if don't page the level on have temporary it they roll know medium-term you've near headwind. quarter, just the quarters were therefore front quarter, next of the few declined – are, actually to and how the same Defense numbers there just to what and then numbers, they in that in declined it stop? spoken what heard those super-precisely and know we've if how might they you temporary kind and set a in get they to over I they ever of to issue. much the you everybody on us when the on

James J. Cannon

certain. was happy quarter, year EO/IR-FP are in is more color we're and few end. a more There driver certainly mean, provide obviously, quarter need ship big there we coming the will In to has for program one the and last a that requirement, and systems long-tenured was to fourth based I we that program that lapse. to us, that awarded be sure. a been an DR-SKO, driver then going may which off you the but tranche expect Yeah, for us know more for have and that

some competing So two that DOD for programs it our in Unit, bring we've But was OCO larger franchise talk color X.X and these more dollars and I'll hand until of arbitrage the points and Defense budget. up. years, book-to-bill up in record for then guess over Business I David to to so are any to we're drive pick got next the two wins in is of wins, we're smaller at continuing that Government base

larger to others arbitrage to David, some color? So area the go want of of up. great that's for business you a win these some before programs to add pick of us mitigate opportunity closing

David Ray

think you on. spot it hit I Jim,

the we've last you row mentioned, are upgrade X.X down. these into growth in moving another of been quarter in the our Also DR-SKO there with are indication really in we our execute for the programs program, That's as in short-term on some QX two going quarters on all franchise quarters that X.X book-to-bill that a expect future all, us backlog in we to the EX/IP-FP that above two XXXX. of -XXXX. will booking plan enlightening. backlog that and opportunities take mitigates as That's but the into indication mid growth DR-SKO, book-to-bill an we is book-to-bill. of think win in Our leading very with, was

Noah Poponak

Okay. in The headwind year-over-year it down? international quarter, that was how a much airborne was program the

James J. Cannon

the Mexican we about Well, to that was was it a delivery Navy and $XX had million.

Carol P. Lowe

it... Yeah,

Noah Poponak

It million. to went $X million from $XX

James J. Cannon

million $XX

Carol P. Lowe

for It specific then $XX for million $X quarter the $XX million in Yeah. was quarter, the and million that program.

Noah Poponak

Sorry.

it year-ago what was So quarter? in the

Carol P. Lowe

million. $XX

Noah Poponak

was it what And in quarter? this

Carol P. Lowe

$X million.

Noah Poponak

And those then me DR-SKO? numbers can on you give

Carol P. Lowe

So year-over-year. DR-SKO two, to QX QX XXXX million flat and are million at $XX for XXXX approximately the between $XX

Noah Poponak

And those year-over-year each what programs then quarter? do do of next

Carol P. Lowe

for about So DR-SKO. was it's million QX It's less it and XXXX XXXX. half for the $XX about

Noah Poponak

it. too it number, think you I XX and I happening what's the the number it's end a as the with if the And I just companies program and on really given it's months directionally But these hear strong true backlog your where on ended that's think book-to-bill the same at the XXXX. look backlog quarter, trailing have at which at many seasonally the where Got you make you defense still the just look And point quarte, specific below the on in if at hand, in look not you. there, but other for consistently situations third X.X. it Defense know Or pretty been that's picking for I budget. Government a up On is maybe the came like quarter. quarter I does bookings I of

that you Or maybe looking a backlog the in anything in just if if immediate unique with to the so term? And change for there's specifics. are program meaningful the wonder

David Ray

things. two So

had look most the about diversity. that indication EO/IR-FP and that is and particularly proud covered I'm an with at That of the XXXX. talked quarter the quarter. book-to-bill we've portfolio booking we substantial you X.X comparable program fact in in this was booked our of a growth the especially to that when that The So we've was that of

the that as that replace are of strategy, really confidence our those surveillance great we types on programs executing forward current not focused portfolio me gives look invest position earlier. for that we but to So for in bookings talked that the diverse have enough NGCD business, to, we X that's as we we around mentioned a future, about really as in new us opportunities only

the forward we programs we'll when to programs for the as year, to think of wait larger really franchise the hit about Going and materialize. some continue mid smaller go hard we to

positioned our benefit our of I A bookings from is we year think and may to we in the and QX the in and to international great we're budget. domestic to think in small relative respect areas. what upcoming in against gives with bookings following book next international balance going are and nature we're relative that that seen that mid those to how XXXX year headwinds of us QX be a lot and hedge the beyond

our the able last as portfolio a pretty much laid execute positive diversity us business earlier. as and we have fact replace strategy think, to momentum that program year large Jim really, a been that geographically EO/IR-FP I the we So out we've that of bookings of the gives

Operator

you. Thank

question the Robinson with next Michael of Ciarmoli SunTrust question. line from Please with coming Humphrey. Our your proceed is

Michael Ciarmoli

as defense budget, And the on with we sort you if maybe business, about, some Good for guys. environment, longer-term you even realistic the just Gen for this the how book-to-bill? growth question. Chemical of line Detector. the give were taking I trajectory that contemplating What's of the Thanks can stay to calibrate on talking mean, color just so Noah's Hey. in questioning. should sort of morning, us Maybe Next headwinds? a

that You've got initial booking.

franchise tail You're but sense you look might opportunity on the like a give calling us program? that potential what can of a it

James J. Cannon

the manned outlined, ground started vertical up cores will, you forces budget. our again combat focus that as it reconnaissance we grow the year if we're if need meanwhile, months unmanned other next-generation Secretary to wins record, of years, unmanned wins lot develop programs, it those years size, fight the to CAGR X% of nine place. programs, ago sensors, about Also power In to Defense kind an VRS very Well, gen Investor time many greater And big And a we've X.X six a expect business we cases OCO mentioned, et and in are takes the the in most and began many push The next or system. with like competed System, to OCO you of nicely of of some opportunities ago, enthusiasm larger said to IR uncooled focus two vehicle, a cetera. mounted as priorities and for point in of that ago. we're annual on franchise and program. has And now, than that war military lot we've as they this bringing program of our these line lethality solution, the greater. bringing we of a on as smaller the of Day, for of wins, next winning almost of FLIR technologies for lift, a The our very we at and point part awarding lot units all a put those funding is in programs in non-line-of-sight cases. have already the in the expect in by solutions. through It's about and weight, And of I'll had have continue not smaller solutions of Vehicle example, book-to-bill a were modernization is again, to battle and being particular we at and we unmanned those many a to funding. market we look driven conversation always has Reconnaissance big having soldier profitable fighter developed. base with lot captures the traditionally technology technology the we

XXXX CAGR. the I to want when larger all XXXX again into And So we if us contribute businesses compete to business, in greater the wins get grow and to continuing XXXX, see be near-term, continuing that X% get you I the It'll then to space where very as hope on, than We lumpy. this backlog. expect a we programs we have we're about and developing think out will. and specific XXXX, late grow

Michael Ciarmoli

Got maybe or thoughts Harris it. potentially of vendor That's space? potential together? of thinking goggles, infrared you opportunities players competition LX pressure maybe there create Any on some two you opportunities? you? then mentioned times. bigger just from If give there and thoughts a challenges And that couple Does the that helpful. maybe of for for are like just the looking coming color customer another is the it on consolidation Does some things us in create for can whether

James J. Cannon

I than remains consolidation don't want about enthusiastic to and speak relevant specifically to strategy say we're and it. intact our very other to that

Michael Ciarmoli

one Carol. Okay. And more then maybe for just

XX%. inning On the op noticed is margins, what guys two other maybe to low. kind R&D, the It expect in there or $X.X think you are you What levers target million six-quarter last Should some a looks R&D I at XX.X%. these The XX%. in quarters trend here? under long-term I running even pulling, levels? at It's of are And like I the a big drop sequentially. there. just color down big was – guess Maybe we

James J. Cannon

to a words say few it then I'll hand Yeah. Carol.

balancing expansion with margin wide in range a in serve of very businesses indicative back we're remarks, spending R&D of is focus Instead, very a long-term business. the trend. with end What got of broad you've we're trying much the to we and base a As seen prepared investment more. not We've the mentioned R&D markets.

smart connected unmanned concentrate like this of transportation coupled or are or more And applications attractive with believe some longer-term trying that. intelligent what to and year R&D the cities ADAS we so markets around effort we're

sensors intelligence learning to and the concentrated more a we make big rates. terms in machine what strength and be But from we've we and to great going company to So will the in focus deviation think investments. more smarter margin spent reality in operating to augmented and spending. our you had and how of we're don't see we three years artificial distribute be from make the I to past have historically want mission-capable, now quarter any that in have R&D additional

Michael Ciarmoli

Got it.

Carol P. Lowe

everything out But that and add impacts to income, And gross also Method but of prepared operating The the highlighted around we only not benefits that we I'll remarks also margins we're gross our that for relative getting FLIR the benefit in and of – it's just timing $XX margins. our the of you'll expenses kind expense a call the a total that $XX for certain bit profits operating corporate just flat timing. to accruals And million and expense more expenses to to in heavily running our little QX so that kind and XXXX, corporate are million see administrative general still that year-on-year. weighted just timing had

Michael Ciarmoli

it. That's guys. helpful. Got lot Thanks a

James J. Cannon

Thank you.

Operator

next question. you. of coming Blair. proceed is DiPalma question Thank with William the line The from your with Please Louie

Louie DiPalma

morning, Carol, the Jay of Good the team. and Jim, rest

U.S. $XX sales year-over-year of a and increased where that by provide can wondering, breakdown from. came quarter's if million was This you government increase I

mentioned I were wondering EO/IR-FP think was that if there contributors? the if and I majority or was you the other

James J. Cannon

– don't Santa we bulk There's Certainly, lot strongest defense a two that Shipments of the a program. of cooled would of cetera. I Also CBRNE products in a contractors. saw the well. the Barbara applications, EO/IR-FP other other a Unit, a contributors. Unmanned whole components I components, could different et our the of EO/IR-FP growth. applications, we out supply as for Santa contractors I quarter and deliver if across point of be know to out to wide strong spectrum saw really defense Barbara range components guess Business Industrial very of for the we

Louie DiPalma

the with and partner go-to-market luxury as for OEM night your has quarter And there I your traditionally, vehicle. Veoneer that source quarter's calls, $XXXX was servers Industrial's for priced last wondering over changed strength stimulating a maybe vision anything your sensor or secondly on customers strategy of was And And auto division. auto demand? this if Okay. cited per at has

James J. Cannon

question. why couple take quarters focused that's in that as Yeah. we the that don't happened Frank, a There's lot on past you of market.

Frank Pennisi

Sure.

Just crouched you see – a night that system, familiar can breaking They're see can't to up they combination benefits does the pedestrians fact there you owners manuals, see open for are of of can't one thermal And at actually to of of And that working owner's read still let – who the rain more see with if metal. a you know, you with things crack lot we're even fog. you and people against automatic the an are an manual or thermal, and you'll see allows things. emergency the you thermal that folks most and Veoneer. it

Veoneer. We but – on with platforms. a don't We're different has – lower-priced number I higher Veoneer partners standard and working platforms, higher volume breaking into of going volume to standard lower to say market or are more and more exclusive of not actually And want that. been

get General a We're platforms a into that into and Peugeot us eventually that autonomous as of So go more a more actually getting more to driving consequence, vehicles. Motors that lot more we're and Volkswagen, growth as to seeing growth and there. ability play into and of continue are coming we from seeing scale give lot platforms

James J. Cannon

good the think job on Business It's I when analytics, part the think a applications, of side the Frank a Commercial run did so for coming perspectives. add, And technology, All our from the is, world can't other sensors certainly The I'll And it VXX a those example. the infrastructure really building with sensors the with two vehicle business. the can transportation intersections can about do at Unit. One, ADAS the smarter, and other describing I we vehicle. is an real-time with the identify acquisition with on into pedestrian of from and thermal benefits. in intersection, Acyclica what look be communicate of we intelligent

on-vehicle about we think we, ADAS well about again, as when as think So infrastructure. opportunities applications with connected the both

Louie DiPalma

Jim One Travis. last one David Thanks, for Ray. and perhaps

competitor a Shadow award vertical opportunities with potential lift. next large won During mentioned for an during And quarter I answer Textron's think, infrared the generation drone. Jim, you notably a

future as to electrical, sensor Boeing future such compete awards aircraft the for those Huey the established awards? the and do Stingray replacement guys optical primes drone, feel the future sensor contract Boeing's that FLIR has For tanker against you

David Ray

I'll parts. take that question two So in

smaller size, So really and the push sensors mentioned a require answer weight sensor. is, UAS you today, do trying Textron's competence and what in investments power The yes, from the to both making perspective. we're we're for to

today, I Our SWaP importantly there that going as delivery EO/IR out insertion strategy the looking activity we of forward since and both a have at systems lay have opportunities its moving talked have we more take investments part mechanisms, from technology the really as When not to i.e., gimbal we that we're combination the we smaller. for investments. become those came well only earlier involves time a is smaller but making size started but really deliberately really to how UAVs a our execute ISR well-positioned to well where totality, such year, last strategy through those what go, about year we're programs investments realize Jim to perspective as about to equipping opportunities next really player a we've there. next we're think are really of have perspective the future that us today we're making to expect technology for vehicle, you the on year-and-a-half. combat going we position investments that as the generation within as from in I And vertical This think to But major mature the lift, think, the a over targeted today, it's and it's us. our Jim become onboard

Operator

is the with Our of proceed Advisors. with Alembic from next Please question Global question. coming Pete line your Skibitski

Peter John Skibitski

guys. morning, Noah's initial apologize of Good missed I I part Yeah. question.

it repeating going status for flavor the you're going there wondering for, Jim and in just G-BOSS(NYSE:E), not different it But hopefully the size got could program? to I I'm anything. you role think integrated the EO/IR-FP role? equivalent And an whatever of I a on for are role be for or I'm

James J. Cannon

a solution G-BOSS(E) what's uncertainty But in near-term budget. RAID EO/IR-FP program with integrate to the to set that's the that's with makes a that the make budget awarded decisions certain may continue of going as ultimately on we're out now. air the the we past program. XXXX, going lot the the and product evolved it'll figure G-BOSS(E) happen G-BOSS(E), one up the to of. the in they decision G-BOSS(E), XXXX are I program, the through and Could Are battle helps think DOD program, a that when again a technology that into It's become two-year the effort DOD to with to prioritizes, proven how now things seen of real minority other the capability. that even on of innovations there's priorities underway, technologies and really working With we're past. With force protection. not we've in right with that scale modernization all the get be additional Right EO/IR-FP right. to doing started the all DOD program investments In We're the the XXXX, such platform. or current bring now

Peter John Skibitski

I you quick understand. on before into are the final award expecting or follow-up calendar ends One a Soldier pushing Sensors, XXXX? Borne year guys announcement we're

David Ray

the be one SBS, competition next so phase know. won to is the the follow-on Tranche X around as year. of next QX timeframe next we So is which awarded you expected end

RFP Again, end We drive the year ensure to expect of on We're we're get here. probably positioned that. on that we're phase to properly of that to continuing go expectations delivering execution the before to one today.

see don't changing the any I So near-term. in that of

Peter John Skibitski

Thanks guys. so much,

James J. Cannon

you. Thank

Operator

you. Thank

proceed Arment Our is question question. with next Please coming Peter Baird. of line your with the from

Peter J. Arment

Industrial. Carol. Jim, Jim, morning, Good guess Thanks. Yeah. I on question a

give strategy your about different Day? you're of more doing the Thanks, growth Investor just of And of was impacts just that. regions, comps, Asia? us seeing then all weakness in driving the You've your here. some tougher just a what's is had as Whether just newer there that how at Are any nice any it's Jim. around follow-up to year-to-date wonder that? I parts a if a pricing from you in all could you timing, details deceleration sort talked but you this

James J. Cannon

Right. Yeah.

Our back year-to-date. be Industrial Business have tougher comp certainly first had that. always step a year the a than strong the would knew half Unit and signaled has We

The the us our product and in example, sensitivities product principally OGI, that's And additional of out five tremendous a our increased. very around finders, and the past optical for a for in to solution. other safety that And come quarters, instruments, prior say, slowed and capability deceleration around our four business going marked or features any, haven't was I'll bit seen have growth. But run we've compared in market instruments for that's got seen strong We gas environmental regulation QX and European rate health in have to any quarters that business. there. markets part as

East If couple the after of begin programs. our the principally you productivity really the We mentioned in about see talk to some opportunities, pricing prepared times collect it. regard movement effects win that out right. security how effort the to talk of business that the when certainly businesses America the various several mean, we pick that at to we the it year I'm the effort We've the remarks by lumpy along early referenced about right takes data, get pricing large in FLIR projects the the understand prime a in is of on takes to like resources beginning and are can with geographic to orders were and With to is a slip board, time pleased an bit coming Method. kind opportunity, productivity Mexican least we of going, was our Middle as we to driven across delivery I data, go that this a Latin The expecting. and get Canada actions, trends, way. past seen all or be that Navy we quarter, year-on-year

pricing, but bringing of regard is that with much on to we're not products Now, future market. current offering, that effort focused to most so product

as in pricing we're products, launch place So, our to process pricing are are – the going through tollgate getting in now new and that being exercised. put tools leader

of newer products market. So, this into there really result I don't going see year to we're some as XXXX a exiting these to think going until come marked we're really

Peter J. Arment

Jim. Appreciate the Thanks, color.

James J. Cannon

you. Thank

Operator

you. Thank

Josh Please from is next Our Sullivan line Global. with proceed of coming the with question. your Seaport question

Josh Ward Sullivan

morning. good Hey,

James J. Cannon

Morning.

Carol P. Lowe

Morning.

Josh Ward Sullivan

Just or of position SG&A, the this but CapEx, for February, context in are mentioned long-term detail is at the point? investments, even us give you're inorganic, you more the frame conversation there growth to and to any organic, investments to going on necessary know the way I

James J. Cannon

but not Sure. Again coy, much quarter, be on the so more to provide the less want in of fourth to we all but the above, CapEx it's though. kind commentary,

business haven't There quarter into got have make kind of past need investments we They're in integrate we into one to own inorganic companies we organic can this we've made because skillsets made investments technical we attract certainly for learn to the as go want our that is we the point there, machines to are we we our also they to for economically. whole had on host the we in that two scale, forward. can and capability to are but that help much capabilities some across we that applications that different that some in the for of in CVEDIA, think an come I engine principally depth acquisitions them, technology Acyclica, past perhaps that exclusivity are minority minority And of of quarter, you've time, the investments investment to helps to we're a we that acquisition more would working creates active a business point been nor minority us quickly certainly we more roadmap. can and sale but it now. investments our aren't advance the our need that those solutions. those Certainly, seen we've pieces. our pipeline several and making need have make investments

of inorganic and do. what NRE, don't required well. lot terms CapEx really of don't see talent, in as that's in I though. to tremendously a it large too we investments see organic being I some certainly, need So, capital-intensive

Josh Ward Sullivan

at influencing towards follow-up a or the the on M&A just or joint the Is guess I then way ventures And you acquisitions pipeline or other one volatility comments Thanks. your there. market this Okay. about pushing point?

James J. Cannon

one driven No. deliberate be, how by it. to or technology campaign, certainly roadmap. pushes The our We've the seen rapidly us we a want very volatility been I to acquisition put desire do don't measured We the really advance if have investments you will. think about again, we've our other. that way minority together

Josh Ward Sullivan

Okay. Thank you.

Operator

Thank you.

line the coming with from Please proceed next is question Capital. of with Jeff question. Kessler Imperial Our your

Jeffrey Ted Kessler

Thank Jim, Hi Carol. you. hi

James J. Cannon

Jeff. Hi,

Jeffrey Ted Kessler

you and other companies made I a in or thinking that Axon the business. of the or of came types mentioned really. Cities just are programs out from see this seeing cities that to you from let's Safe looking across what of know say the benefited affecting talk there public-private your first and about I Good Conference money for divisions? time is have What would amount a partnership I'm talk of being out with being this for you available increasing like TASER at your safe couple there are that's that again. And just ShotSpotter. And that the

James J. Cannon

you want that? Travis, to Right. address

Travis D. Merrill

Jeff. Hey, Sure.

Jeffrey Ted Kessler

Hi.

Travis D. Merrill

the seeing, into around, Systems. the it We're the a U.S. We across on to the single smart of even to of seeing suburbs, two federal level a bit sometimes cases domain expanding platform both be some safe we municipalities. continue city are public we enthusiasm orientation, also seamlessly area see more much the momentum in beyond the within Europe type as really side into these securing are Likewise VMS. whether on of single well more as security that a lot Intelligent Transportation the joining in of little and within see networks areas starting a metropolitan funding smart and coming across at Largely, entire a

So past mean there security is momentum nice focused enterprise really That's some the there in yeah, where business. wins good. quarters. I we We've the couple our of had

it's a focus for So continued be to going us.

Jeffrey Ted Kessler

little – infrared next it that with specific there us be on take it new you the sensors going Lepton, maybe can anything requiring sensors affecting update any company but area A you're just product who's to new that not what with regard of to or And would that? next may out in the doing to that what XXXX you're a be, be give Boson of step take Okay. or out for something to I'm I those in the take you would question characteristics advancements would sensor the year? bit looking like your something small terms wondering further. know have follow-up XXXX, you in or that

James J. Cannon

alarm. Lepton and a a was seeking breakthrough push great no power pun SWaP-C at us that's intended the The business, a around a with that into our obviously Well, light the unmanned security dog Lepton up endurance the always a for go though we're more for applications example camera integrated more unmanned of do LEDs or pushing and capability. that gives EO can size, sensors applications, question. sensors, analytics we the to different seeing moving it's to weight, Lepton now the performance. trigger humanoid if our onboard and we're know a with to core, you're I doing what I'll mean, back to more integrated SWaP-C with can by

could we're solutions, getting cetera it's regard a of we're our maturing We not delivering, it. seek of, solutions absolutely in go our Boson that proud nicely So to that but with and intersects as production, I well. real of solutions ADAS on for constantly disrupt we're certainly into always cores. to satisfied the in lot a But on, host sort places. et different example Unmanned security with of company ourselves

Jeffrey Ted Kessler

you. Thank it. Yes. Appreciate

James J. Cannon

you. Thank

Operator

We question follow-up the Thank from Sachs. proceed do with your line of Please you. Goldman question. with have Noah a Poponak

Noah Poponak

cites there? other Thanks. Carol, the release million cash cash the is flow statement activity $XX of What in impacting operating in flows.

Carol P. Lowe

are pensions there that. is liabilities So within of other part and

that and assortment penalty So the combination piece just other amounts it. concern is relative a the of liabilities, but then agreement, to the changes and agreement of probably biggest pension to includes relative consent just the

Noah Poponak

was your working number? in that capital what in in Is us the can change tell you quarter? Or that

Carol P. Lowe

that's on and for primarily driven row accounts payable we're So and a receivable X% quarters the working accounts capital and year-over-year basis now the net been total three for we've that, number the down capital improvement in working down a improvements. by

Operator

you. Thank

of We session. the have reached the question-and-answer end

floor management over any concluding the So like or I'd to comments. for additional back turn to

James J. Cannon

to Again, call joining I our you today. for all of want thank

the our dedication on results everyone. to our continued you and passion year forward X,XXX As globe thank want to Year. always, New fiscal for the We customers. their especially end you look FLIR over Thank I updating after employees our across to

Operator

this we participation. may gentlemen, you today's teleconference. time. disconnect you thank and And Again, does your lines for your conclude Ladies this at

Teledyne FLIR (FLIR) 30 Oct 182018 Q3 Earnings call transcript