FLIR - Earnings call transcript Q3 2019

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Operator

Greetings, and welcome to FLIR Systems Third Quarter 2019 Earnings Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded. It is now my pleasure to turn the call over to your host, Lasse Glassen, Investor Relations. Thank you.

begin. may You

Lasse Glassen

are Good www.flir.com/investor. our Operator. release and you Investor this thank the Presentations Events Thank of section Please morning, note joining FLIR's call on to call. slides website press under that for the presentation and at you, Relations referred everyone, available our and earnings

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

and comparison is basis. results adjusted our because morning's and be release. measures time. the believe of consistent discussing it an of the primarily non-GAAP between the full We enhance reconciliation over operating core this understanding will non-GAAP We our the results GAAP A for is can adjusted results that facilitate press in on ongoing information useful quarter

FLIR. the now it's to With of Cannon, Jim that, pleasure President and CEO call over Jim? turn to my

James Cannon

Earnings Good Lasse. and Third everyone, FLIR's Call. you, Quarter joining you morning, thank for XXXX Thank

Merrill, Business Frank President the Ray, Business our Financial I Unit; Business also of Chief Counsel. of Travis David on & President Officer. our is our Carol President call are Unit; me Defense joined Pennisi, with Galindo, and Industrial Carol Sonia by Commercial Speaking today of General Lowe, and our Unit; Government

Overall, mixed. franchise revenue our awards, I'm as operating the Business were by & of Unit, with Aeryon program is performance Government and FlIR's delivered of augmented well growth acquisitions Defense organic solid as consolidated third quite which the that quarter results pleased margins. improving Endeavor organic successful

We operating also with bookings the momentum build continue to along strong Business in the margins. Unit, expanding generated quarter Industrial which in

Maritime OTS, However, headwinds. divisions and a couple of Commercial face continue to within Unit, specifically Business our

Unit by And key end geopolitical were markets some Commercial the by and served Business factors. negatively macroeconomic impacted

consolidated operations While remains our made with we FLIR's I which third that progress line am evolve quarter execution said, areas in long-term in strategic strategy, With on satisfied we from XXXX. flow May remain and confident of expectations not cash FLIR's continue with strong, We've to performance. our very earnings of several very plan. meaningful revenue the in shared strategy our were and

decision focus customers. support, end Our in the evolving and airborne professional and all upon solutions, unmanned are solutions, strategic market leadership autonomous priorities while ISR to on focus sensor evolving

We've automotive announcement, doing made supporting forward the addressing compliance yesterday's leading we're in fundamental also strategy unmanned notable our business. needs great our as And position while we progress we're shared in solutions, air and are in of moving with autonomous Group Not ground. consolidating so advancing X only a technologies. successes,

we As strategic priorities. fuel, our the focus will and evolves, strategy feed execution continue to FLIR's of

negatively growth. many external current faces FLIR, challenges like companies, impacting most our

X to more to these months emphasize our We Day entire largely to planning must across Although you XXXX. enterprise. the sharing and look low product growth opportunities we organic the acceptable, growth work Investor to reshape an forward next simplify portfolio in to QX are with are rates higher external, the challenges not host X and are and currently details actively over

overview third to on will let's financial her on key our in of X provide Slide the several an highlights. quarter additional move third with of beginning details financial quarter Carol Now comments prepared performance the on remarks. presentation,

this earlier organic million. announced growth morning, reported third As X.X%. of was we was growth revenue X%, quarter revenue Total while $XXX revenue

currency of approximately impact a nearly brings by approximately exchange foreign Foreign or $XX to This year-to-date exchange negatively million. million headwind revenue impacted $X growth on X%. the

growth quarter. as franchise the the Total bookings and wins increased nonprogrammatic program significant the orders & Business prior compared Defense by Industrial to Units, Commercial XX% in was with primarily Government in year driven along

For quarter of XX-month the current $XXX XX%. bookings to of million, compared balance XX% third at backlog at stood company of XXXX, end the increase total X are At up the the XXXX. first quarter months end, total an

In million backlog total increased XX% to the addition, over period. nearly $XXX same

within to with X% increased quarter and Compared growth third year, to the million, gross the contributions Business Industrial Defense & last acquisitions Government $XXX profit and organic from Units. due the recent adjusted primarily

adjusted XX% to offsets basis XXX points This due markets recent along more from FLIR gains productivity weaker to initiatives ongoing of our the with year in However, prior in of of gross compared acquisitions end commercial our than margin all through ramp unit. decreased business the Method units. the business

last more effect expenses, compared the as margin an in well recent declined year-over-year points dilutive quarter operating discuss income in down Carol operating of detail. the which adjusted basis as Adjusted acquisitions was addition, will X% year. with XXX increase to due In third corporate

of which year X%. year-to-date the now full full approximately $X.X We quarter, Based approximately fourth on our and organic for results fine-tuning year X%, approximately representing revenues includes of of our we're expect XXXX growth guidance. outlook billion, growth

represents per low full guidance of we the earnings of the range which expect had provided adjusted previously. year $X.XX, end share also We

dividend of per December of $X.XX XX. on November announced will which to the of we quarterly payable as record Finally, be share, shareholders X

the quarter our delivery in the of few discuss Method. strategic term, that to in and fuel, in with specifics now highlights third executing also the feed progress address our recent help start FLIR our priorities plan the executing key to fuel focus our I'd feed like I'll near recent our strategic switch and gears will more and business. a on business progress

to with by move indefinite some Slide Government Army. delivery, weapons. awards contract of contamination growth CIDAS also $XX chemical In chemical development that well in equipment to response presence engineering, a Spray the agent indefinite missions to the of chemical the technologies used emergency Defense The awarded minimize of the map exposure or provides save quarter, fuel vivid the to our be or It various will for which to identify of after which the as as the also enables XX-month various million Let's inform decisions, Contamination weapons. of consistent help the our quantity Business business. management better innovate a can Assurance contamination, U.S. for decontamination hazard at the stages X process recent personnel with spread minutes & Indicator/Decontamination manufacturing unit lives. the ability to third strategic is color objectives key to aiding indication and all CIDAS, was award

contributions growth Combat the overmatch this for will is with at highlighted unmanned which programs, confluence of is franchise team & the our this Annual sensors Association Howe, army's perfect Howe unmanned intelligent U.S. including This partners, surveillance Robotic MX Meeting offering Business FlIR's from the and Slide program, Defense technology utilizing from opportunity for on working month's platform large gimbals, a our and Howe contribution And Unit XXX-degree technologies. on the our of Vehicle a unmanned along our & include example prototype, Ripsaw FLIR's an combined cameras ground Textron world-class situational X. assets, Army debuted tethered The in battlefield. AUSA drone with Government next-generation Howe RCV delivering & and awareness, of to and or robots. or the results Textron

our program modernization fighter. protect strategic very As year. our provider DoD's is for the a final team's this with priorities, war utilizing selection later a with competitive are to plan optimistic position which position leading include award well unmanned unmanned aligned as next anticipated result, program the solutions to solutions for we about FLIR long-term This

programs. Industrial advance continued Unit Our also Business franchise to

is for selected to Veoneer in production Slide with The FLIR Veoneer for on autonomous effective highlighted This and first planned by system for XXXX. sensor for its was an of value be the unit we in other suite, component top a be FLIR thermal X, shows to maker selection today. initial will early way As contract in thermal on essential global vehicles With over the auto by self-driving vehicle for believe adoption applications, sales future sensing cameras thermal only FLIR's to enhance sensing sensor imperative cameras, the sensing vehicles. which hundreds manufacturers. thermal in on automotive thousands multiple the ADAS XXX,XXX automotive-qualified deployed of which thermal systems, FLIR paving passenger over component of safety automotive-qualified cars of experience of systems. include that proven has self-driving warning Veoneer's years' supplied key and the by cores driver industry have XX the automotive, today sensing are a

UltraMax high-performance release X. safety job. vision unit improve The T-Series camera our for thermal critical and to enhance Turning Unit September, new to technologies utility to patented family for will an the on to industrial first image Each processing, In called streamlining Slide that detection in inspection responders ideal and new imaging MSX feature the of Business multiple products, thermal the TXXX. is handheld the inspections route assets. incident drone-mounted subscription ranging camera This business and software the thermal including equipment incorporates available help onboard new from launched cameras clarity. Industrial advanced the companies' camera

mariners, of series recreational the stabilization series this safer thermal to award-winning September, integrates MXXX the Raymarine MXXX enhanced the launched cameras. and high-performance and multifunctional display. in technology the marine professional awareness with Commercial increased The latest MXXX offers new displays, navigation Axiom and family Additionally, situational first generation imaging, thermal multispectral boaters. Business responders the to Applying marine Unit of visible, including navigation

allows response both quarter, multi-gas chemical market harm's Finally, assess air. When Unit systems. the forever. scene immediately determine gas way. the MUVE detector aerial anyone the monitoring hazardous the teams, industry's and Government operators to at into for & the drone sending Created introduced change into the remotely Doing flow allow of in CXXX, situation emergency unmanned source the to this and will the CXXX first so the CXXX process to vapors, in before arrives responders it a fly Defense for will the the Business

that deliver acquisition X, long-term unmanned Slide and investments property systems. we small assets which to of aerial technology early Aria October, enable will to assets the our development our delivery tethered advance make The us FLIR's of of business, we our can the and market announced been strategic and segment. the strategic Systems of Inc., on plan. industry-leading Solutions additional this continue portfolio. In enhance and feed in augmenting to Aria's Unmanned further capabilities certain highlighted operating IP growing customers assets Insights, will technology into As solutions Integrated have of integrated Aria range intellectual innovative pioneers the we current

of and X. elements Method drive to emphasis FLIR. fuel, as Slide focus TFM long-term to TFM X or The turning Now is business on the FLIR with One value foundation we as comprised remains the an feed creation.

be to Over several next of the our of the complexity company. we'll utilizing assess TFM the overall tools months,

company technologies, our wide of range to we and a size, For bring bear end equally serving wide exceptionally range customers. markets of a an

our with reshape and Our updating in save that unnecessary complexity. serve decision look analysis work critical to provide on lives same on be professionals better to to technologies eliminate portfolio livelihoods. ways calls. forward at time, to future you We our aimed these At to activities finding will support progress we'll the innovative

now over Carol quarter to that, financials. the for her With third review turn of call the I'll Carol?

Carol Lowe

you, Thank Jim.

XX, on at are these quarter find of you'll with our to Please the the note, all GAAP results. a is Looking of third exception included flow, non-GAAP in filed Reconciliation appendix. basis. financials cash financial Slide data

during X% mostly made was while our the due decreased rate growth mentioned, a $XXX As advance the decreased, increased quarter, X.X% same revenue generated acquisition time year-over-year profit gross a income to unmanned of operating the year, last margins third and in third in on to basis growth adjusted for adjusted of strategy. X%. resulting frame. Organic Jim quarter the X% Adjusted versus we million year-over-year

these communicated, margins to expected As we previously investments. near-term when making these impacts critical

those As investments continue from on coming contribution strategy, the we're executing our confident quarters. will we we in realize positive

line EPS At line, third the adjusted the expectations, in the revenue. $X.XX notwithstanding our bottom lower-than-expected quarter, third diluted in quarter with was

R&D in compared the investment have a ago. and mostly experienced expenses investments sustaining to trade elevated in year to corporate is IT same general We infrastructure This due our quarter compliance deliberate technologies, resources. the

happens. on and additional ensure are revenue that aligning We very base our with focused expense our will to actions consider profile

that improve to everyone penalty, time are use like million we suspended, With agreement, into Under about the agreed the respect to of which to funds X-year agreement, is half compliance. years we terms our pay a to a of the I'd consent remind we $XX now X.X those provided line.

into we have X.X estimate trade over $XX consent agreement. minimum We million will next years, been making major which, the exceed investments required compliance, the by

our into to deep program compliance and are implementation of more We fulfill a expenses as incur will robust related commitment. our we continue

audit undergoing required We by consent first the agreement. are currently the

the XXXX. by This end to investments. the receive our QX audit and expect of results greatly compliance remediation efforts We audit the require will of inform

way We matter of the this the remaining will agreement. we provide term on through updates work our while

to $XX the the buyback million increasing from Year-to-date than third were X.X higher cash of we shares. X.X shares year-to-date operations approximately for generated our X $XXX in quarter, $XXX approximately share repurchased flow marginally In XXXX. million million, million, first quarters million

$XX shareholders through payment million. in million QX $XX for payment a Finally, dividend we the to year-to-date dividends of returned of

balance cash approximately was $XXX XX, September Our XXXX at million.

items discrete for the foreign-derived benefit tax earned lower for credits first year, expense, by flowing adjusted earned the burden quarter, these was through income from a driven from income U.S. on XX.X% rate by second the into with half. income from catch-up GAAP adjusting mainly XX%, foreign subsidiaries. a our impact the items tax full and combined reduction in down research the Taking quarter After higher there was effective account a for intangible tax of third

approximately rate year, tax XX% our full we to expect items. the effective For discrete excluding now be tax

outlook. a bit XXXX our on more Expanding

we earlier, which the of growth $X.XX, represents approximately growth full revenue line, end organic bottom year of earnings our year-over-year X%, low of X%. per we $X.X year expect range. At mentioned approximately including full which Jim billion, the was share original adjusted As of guidance of anticipate

Through on fourth dilution and our all third first approximately quarter. of these dilution scale EPS X the $X.XX XXXX expect Endeavor the guidance to Labs of revised prior As nearly acquisitions. the the the year, of from calls, businesses acquired adjusted that Aeryon includes from have sequentially months communicated Robotics and to we

XX. Turning business to Unit. Industrial from with I Business the our Slide each will beginning the highlight performance of units,

essentially million, was Test $XX gradual and offerings. we by QX by offset and based products, to resulting Third XXXX. for QX line for that was fixed than cooled million, from improved strength lower revenue the in quarter margin X% $XXX cameras UAS were was to and mix. income the seasonally Measurement in basis and transition continuing higher cameras by Method, mount revenue flat Machine year-over-year. The cores year-over-year, & XXX Operating handheld and Operating realize driven favorable industrial points Vision demand from continue product gains driven sustained FLIR productivity results

organic All X% to the the such half These On have also revenue The NBCRV be by anticipated year. awards and with will of Defense XX% next Unit the expected of Government & recent mentioning several to contributed a programs we to growth. production previous basis, XXXX. future. contribution the are significantly programmatic that mature years, businesses within the as Defense the of in for be but announced in large growth MPCAD growth significant year-over-year, Business Business acquisition. unmanned saw including development of take & source It from the in several an organic second worth business Unit time grew Government growth exceeding the is XX%, organic the

having XX% Defense & backlog margin replaced acquisitions. Operating mainly the QX, over higher Business expenses basis the reached from increased of a a operating income XXXX Unit In to and end-of-life due quarter successfully large total $XXX program. & increase the year-over-year quarter, third Defense for XXX points declined current Government end operating Government million to X% recent

Defense While first Defense Government the stages stands X.XX expected from Middle with XXXX. book-to-bill and year. of final X QX awards than have due in delays QX quarters we at that several customers, of less award the Government & & in that for in close QX later to for our East XXXX Book-to-bill X are are

business decline, experience a to The quarter X% continues down impact directly was foreign industry year-over-year, revenue Business Unit third conditions. year-on-year The inclusive to currency. negative Maritime Commercial from revenue correlates which X.X% of

Additionally, signs we're the as products persisted but our the the seeing into to for result third OTS realignment reposition positive headwinds a of the team's from quarter, professional. efforts some

growth on double-digit hand, the line operating last year. ITS and and Our year-over-year, business, other points top Commercial over respectively. strong basis Business Operating experienced income decreased for the XX% margin XXX

for and is Method processes, of declines in business our to implementation the overall record unit negatively bringing was the Maritime Although profitability impacted the FLIR OTS. by productivity revenue

performance. negative import on and exchange also financial a continue impact to currency U.S. Foreign our tariffs have

the our acquisition-related reconciling million. will amortization non-GAAP on $XX.X third quarter. note the will items, expenses find acquired million total pretax to million, in for the portion. Slide pretax $X Consent In $XX were I $XX largest that acquisitions approximately Total appendix XX, including expenses is intangibles with associated reconciliation. million expense of represent you the GAAP agreement-related after-tax of of

the will pass I back Jim. now to call

James Cannon

Carol. you, Thank

third was period for quarter a The productive FLIR.

our priorities our key integration to by will on continue the key of recent We programs strategic the advance be many that evidenced made important success furthering franchise as objectives. in achieving fronts good growth acquisitions, to successful and and progress our

As our ground and autonomous in programs unmanned advancing great part air we've solutions made while automotive this, also strides supporting technologies. of

a with industry into It as is peers. growth enjoying best-in-class margins our objective company higher to evolve while compared

expectations lot our of with challenges address FLIR's of third working identify However, did we ahead. sense the and on. our top we're head a line and in growth still work have a meet quarter, not to urgency

diligent In enterprise. integrity Looking to will The commitments to accelerate FLIR Sense tasks exceed our innovate to to Sixth World's continue efforts remain beyond, we to Method quarter and our daily our livelihoods. doing save the the with so, lives to our purpose the and in and consistently fourth we across leverage

With I'd like up to Operator? now call the questions. that, open for

Operator

Instructions]. [Operator

from first Skibitski Our comes with question Global Advisors. Pete Alembic

Peter Skibitski

guidance is X% segments balance want X%, is the are understand Or well? that to all unit? due to there as factors Just other Commercial lower the Jim, sure FX? Or on other to in basically organic from revenue I that. the make

James Cannon

is some of FX headwinds, but for & it Unit's look Yes, to year Commercial OTS got real to enterprise, but the continued too our and year as just as full spots which Unit some throughout organic portfolio, expectations below accretive Government the Commercial the our we in we contributing Business is very will If as with and OEM, expectation be small business, Business businesses. it strength and nicely bulk our are the restructuring, impact, ahead acquisitions bright the some at If will. despite expectations Defense well. look there our in around principally Maritime the Industrial we to basis, not what mentioned, modest in grow an on growing we've of we mentioned you if but well move be real has ITS prior overall is,

Peter Skibitski

Okay.

Okay. That sense. makes

awards me. better think I government size also. Just this these some particular in a just organic us of maybe you been growth? Eastern programs one strong for it's expecting? just sense And give I quarter the think which can you Can second in driving you're are of this then follow-up that Middle quarter, strong

James Cannon

Yes.

on EO/IR-FP the as year, Government done our of the DR-SKO, as end-of-life final throughout good which business So Business past well this quarter. finding we to a offset Defense program the non-programmatic really & the of shipments has job produced

record on programs a bulk to we as been build compete oriented as wins the business backlog non-programmatic the of of and have XXXX. of we've such the larger enter much So really

well System Xrd Airborne which Hornet begin Soldier is Nuclear XXnd in some these, good to are notable we of on, awarded Borne gotten well Chemical as Afghanistan, we Brigade again, XXXX the as that of Combat we were have took Reconnaissance through fact, larger producing programs much to we're as Biological in System, and the But Borne said, the team when Black NBCRV, Soldier we've expect the X go and most to the year into produce. earlier delivery feedback That Vehicle beyond the into been the programs.

excited in program, SubT And the also MITRE accelerating as in the for systems, this be the year and going shipment robots. next Vehicle The well into into through exit into ground with will robot program will about Ripsaw. as delivery. Remote be and ground we our prepared the slides, we've and mentioned Combat next For team we're remarks QX year, year really

with ground partnership is awarded that produce East. Howe did those. big that the quarter to Textron what The robot an of and to We the armored Our modernization with Howe Middle materialize really out forces. ground -- in expectations mentioned the were well, unmanned international augment & order be disruptive expect to we still system

by right early timing a hope receive However, year-end them to the year. into bit. to slips We or next

Operator

W. comes Arment question next Our Robert from Baird. Peter with

Peter Arment

any your of -- segment, the line XXXX? Commercial the -- you about in color us that? talking when portfolio on time product that what any give on in reshaping can expected Jim, mentions the And the you're

James Cannon

a logical Some restructuring well cetera, on evolve After this happened described time tough to continues the military transition. et to we XXXX, pivoted we've that's That's for produce the that underway move already enforcement, and is that strategy our professional year. customers, sights, through us work that been that we as with we that of OTS XXXX weapon users headwinds has focus law through of priorities And our May transition throughout in of as to the that the strategy. business.

compared at want going very our need more we year, we're range have to of markets, looking have Investor how of growth to mentioned, the wide we're prioritize we of on As but having and footing, business we best-in-class margin an down We a going again peers. next already cover a QX to rates to forward. while end Day in

you quicker look all our support. and unmanned airborne and are on that our helping ISR if technologies across to when is better ultimate put Because we make emphasis more save going will. going leadership, livelihood our forward, we much professional decision purpose, in to autonomous, decision priority of at a lives So sensor

from technologies continues pivot throughout have to through launched. functionality to business have year worked XXXX, of the a that their nicely they've professional other XXXX Maritime also and throughout displays headwinds. grown to more with multifunctional They this focus Our but have feature has

And the move done subscale to just business, Commercial Unit, well. has I ITS overall the quite inside Business as mentioned actually It's enterprise.

portfolio able a portfolio, higher just not you we if future the the address looking, growth we we're components to compliant our but forward the into and be not the and evolution complexity direction. will, focus But key shape footing, at systems strategic how this to So business scale be specific R&D, prepared plan. going the of are of right so inside moment to give have any

Peter Arment

what follow-up, are just over channel. switching that if I solid And is -- the But bottoming-out sounds I for is mean, to process? -- Okay. maybe can as you market on a When Test in the there? But very & OEM Vision just this Industrial in what Machine Or growth, Frank. give a on we us dynamics color seeing from Measurement? exactly this

Frank Pennisi

or is is the performing that we're peers, a Machine is the business. What Vision Vision you've specifically, above what I'll of seen tell of in our in the the What of semiconductor space. at at or in double-digit growth a this there's the bookings in at our the the either general seeing, you're and automotive consensus point. our electronics consumer or Machine seen you What bit peers. space We've reports business near tell you Yes. bottom level I'll downturn

just and the space, particular feel in Measurement In that the GDP like generally the about we're Test & kind great space. a just I'll that at tell of market. growth bottom So you, on feeling it's

in generally function happening position that. just the what's of That's a we're So with good with economy.

Operator

Our Ricchiuti Company. & next question Needham with Jim from comes

James Ricchiuti

that surprising a hear of that to these bookings in that bookings in is it's the markets. Vision Vision key given about some Where to talked camera of industrial Machine momentum question, yes, you're from weakness the Machine follow-up seeing coming a just business? As the the in growth last little that in business, you kind

Frank Pennisi

Yes.

in and So our a a efforts have that time go-to-market starters. that But you are to the been lot a of the able growth us spaces and to bit the it tell put booking lot allow fact of I'll higher spaces, of we're addition would relatively of still sciences the tell that a wins have life fact of into in to we in is the broad-based effort I downtrodden. some are competitive getting you, areas that some some occurring for robotics

James Cannon

in innovation got some too. Firefly And that there's business, been point analytics, I'll onboard cetera. that's et to nice

James Ricchiuti

sounds Okay. That's and a for don't the at to -- or know wondering business, you're as pipeline out follow-up, helpful. And I David, if, discuss the then XXXX. this was if I looking But you does Jim, on willing that. in activity you're year if willing But -- point to this to comment expecting for broadly It more like the look there's the the that some East. you're additional of end this potentially pipeline Middle how wins? franchise A&D

James Cannon

color. book-to-bill for the the X.XX. robots, We've and & go Year-to-date, hopefully forward applications of for is year. end Government some the some Yes. awards again, comments, you unmanned ground David, now and lot of a strength some expect our seen unmanned add the Defense between can I'll Business and about as we make in, program

Some into to exit do you begin as much we programs want to XXXX. add the award larger color? some XXXX going of David, the But

David Ray

expected DoD we'll Jim, start only I in platforms rotor We think first to the efforts programs gimbal start you're of in kind take surveillance have proposal thing when year, of will of strategy. our next acquisition we're year, are activity modernization RCV customers business year, around around the wing about area, some to half our carbon up which effect next an The big the programs perspective the G-BOSS(NYSE:E) business drive firm RFP The in to half movers the that first of shakers CRS-H in business. and to spot the would an like are from the But the going for on. second there. think positioned half year. you like well robotics I and is, what's be think of awarded add really the franchise

Operator

with from Our next SunTrust. Ciarmoli comes question Michael

Michael Ciarmoli

I really, calibrate don't these production programs. half mean, They Jim, curves? about from it's you there's elaborate I does into margin. assuming of -- 'XX. kind how think in government expectations side, here at can't should phase. XX% Can just the normal development the expansion, point until you our about or alluded programs. start-up bit? just some given I learning a expectations talking I I little Carol, there government guys I Maybe And Jim margins we government you about one just of to our kind margins guess, of But second to shift prevent maybe sort mean, but the for cadence think costs, if They're these that know of that stale, remember it's about margin larger a code talked is stay just development of to -- And on to calibrate

James Cannon

business, of a historically and Yes. non-programmatic be think continues Defense our When to can and/or about Government SOCOM work mix. the that funding, with very I and with years strength militaries. to driving has growth sales good product margin profitable And business. been & strong the OCO be most its focus directly over accretion allied

So we're going to maintain that.

met they with been year, year, growth. legacy we as largely the want lot most on about near programs. of design And look our much infrastructure, is what at to talked But come business that's of go-to-market focus the of has Certainly, we non-programmatic. top throughout right and we when the the as strategy Investor last of term, a the we core it And of align in, requirements layer when ours. right the them right the now book-to-bill the in Day building we're to drive larger product to at really

robots again, diligently, meanwhile, in team look XXXX, continue unmanned Howe this and much that profitable. at with with additional going to we're XXXX the And on. of going to When going after, R&D through be of year, are of growing a it & will a require through amount for begin the to we end remote vehicle confident and combat lot on ground deliver and XXXX. Ripsaw, these into CRS-H development end forward. partnership layer business Howe, the but towards our Textron programs We that be non-programmatic the But whether these in example, and more tremendous work begin and quite we feel of technologies can don't XXXX the in the that technologies bulk

Michael Ciarmoli

I your is boost this that one Got XXXX. core. follow-up, your I some think I it it It's clearly was clearly at think I to $XXX mean, it. growth mean, look guess. talked doesn't is going sticks some help but I I of this I margins. be seem I then And know eliminate mean, -- called since but, you Maritime, I just mean, It dilutive. 'XX, I mean, business out Jim. more nice one I in reshaping, you back seems that's if run clearly about rate margin million this could volatility, this mean, out, one divested?

James Cannon

going evolving any of that which to we're and to upcoming Certainly, pay Well, our with strategy. as QX to general about around sensor always the we're ISR, today and leadership reduction performance disappointed But strategy, much talk we We're specifics heavily the considered. we're now In to any will mentioned, business that decision innovation. the go that's going we reshaping just Day, potential as complexity going portfolio prepared going Right. but it's unit, year, something year-to-date. naturally forward. to to Investor work attention more the not next we is in individual proud be focus between unmanned, lot we're evolve support. drive business and be consider been forward, the of of upon done as I I'm

Operator

Our next from Jeffrey Kessler Capital. comes Imperial question with

Jeffrey Kessler

Commercial division horse, of into call just because beat given if companies a marketplace business what areas to in, want conference of it -- from there wondering some users be is at like market and your of to price. where Taking to in Axis a of the bit that be and -- there market? some to are the those in is this value actually good the But the that question good bottom end at -- seems going market I'm came dead. year, over end. is let's repositioning certainly, I'm Asian there interested It's are obviously, the wondering you to those competes sell end this from yourself for it who dead years. a -- meaningless point. capabilities that a is the seems The actually I not I'm get it's Is high price-sensitive, will actually there quite just having at toward like call, pressures, it, expect to SightLogix to but -- out which less you price there a a again, area, vision And it. for you end, just success you far with at top OTS on the look is is -- in that try what having is, position how of,

James Cannon

Thanks, Jeff.

on we For focused to critical the our where willingness and are customer our applications, have a infrastructure for does security technologies. business, commercial pay absolutely

we projects For had in the critical bookings to commercial very tied quarter, the India. security actually infrastructure strong business in

security, or continue to with also airport applications like federal see We center other security, applications. success perimeter data perimeter government

focus going we mentioned, value the continue competing imported products the But lot to critical applications Chinese these value upon and such. a against to our grow. for infrastructure bottom in that and cybersecurity at cameras that end you the intend bring, not do market forward we'll As also and see of technology that need of

to are business well. orient we're And market, return mentioned for the to largely needs. and weapon professional, Outdoor serve right success to our military build Tactical of that the enforcement to channels We've You good and growth made early number products commercial those stages sight and work outdoor business that's as to it the with specific focused move enthusiasts. law reconstitute we upon business, the their business OTS that SKUs the requirements, as the was And Systems, it of market. OTS that in developing to seeing meet required their a the reduce a

Jeffrey Kessler

Okay.

have right, OTS size the So being if repositioned. this is I

Commercial just doing commercial Your actually is garden-variety Commercial of Business, the obviously of fairly well. -- is -- part the which than more commercial, part your much the

that And it parts the are the well. that what I side the of security down, of are take one and that so part are business that the really side combination pulling of -- are business ITS the OTS the doing are Maritime whereas commercial and

you thinking just parts these Day, Investor year a in say now want from core parts of and are these might at really what you I'm the what or your of company? a, about about when be say, so businesses let's I'm to businesses what to So thinking not going

James Cannon

providing Maritime right. inside they're principal you're That's Commercial, headwinds. correct. businesses And It's and the the OTS

Operator

Our Securities. Global with Seaport next comes Josh Sullivan question from

Joshua Sullivan

the long play Can on margins? transition on other are transition? where And the you Just think out? you Are platforms, then that how that do on to business. the the a on will in comment the question expand Industrial Just transition platforms? business handheld we higher non-handheld

James Cannon

comments, monitoring Yes, chime plant, you Frank, more applications see more of I'll make solutions, can for unmanned for of unmanned first lot a of that property see want it commentary? fixed-mount responders, We a do safety Frank, inspection and some as want couple with to whether equipment you we be lot. to add regard a applications, and and different and in. people continuous growth But

Frank Pennisi

say market We're the growth, can margins, that and FLIR whole. that's growth industry and to around interpret a shifting into with a with a and thing categories of good I'll having fact, Jim's The particular Yes, transition. to it us, well. priorities, the actually going in entire still well drones ecosystems -- unmanned margins trend the of that a I as the you And and we when fits really folks accelerate there, this. faster if are fixed are accretive over would business. for in handheld at support, very walking Relative say autonomous still just that are, that that into we're and is mounts. particular seeing into but for Those decision key data is capturing that look high-growth using quite slowing to which very category and a that

Joshua Sullivan

Got one Maybe of are opportunities that. on are the adoption automotive then for some here? it. And industry? on current near-term the Appreciate auto thoughts efforts. time What the just autonomous the what the line

James Cannon

in demonstration Yes. fleet Right out there. every that's now, or we experimental participate almost

part sensing be that's required As the we've levels believe suite stated, of up. is to a we as core thermal of move ADAS going

with part automakers in XXXX. a they Veoneer, use have to core We the suite. partnered announced As that It's it automaker the yesterday, will won contract a to a in with really solution. encourage go adopt of We're major into this other think thermal sensors about excited their first we it. sensing production multiple will as

a lot got because from see then there. onward, demonstration had the fleets we've successfully. been to adoption in And first work that So upon quick victory, great to sure a lot make we that's the of if will, you and out have expect of we we've success deliver that XXXX

Frank Pennisi

you'll all this AEB, that XXXX, autonomous not and not in see came in think momentum that Wall if turn AAA that next -- few thermal-assisted or lot standard autonomous from talking thermal vehicles, a you AEB but And vehicles to has over emergency the study that the the systems in AEB it I But placed The trickle we've that recent that It about. sweet over to automatic also will look don't basically a trickle well flow braking, published. want building says of Street only vehicles out actually system. the thing in only Journal emphasize spot. to is I'd that. years thermal is thermal-enhanced gotten in and as a essentially that's night, a directly work at and as that on we're space

we're lot about up a there's company. -- what a So coming as of adoption very about excited

Operator

next Noah Sachs. Our from question Poponak comes Goldman with

Noah Poponak

in digit, single as third. third, kind one growth of high rate at approaching and So versus the $X.X it imply similar healthy two XXXX the had guidance, If in a & assume would the second has to Defense if mid-single, quarter fourth fourth take Commercial pretty it I or the Government that of acceleration have the Industrial I least and through X% revenue kind have just in the would of the organic. new quarter billion,

has being grow go can you're And and those XXXX? that changing it as some have? where of alleviate are the we're into in with target sound segments about little describing long-term a should the quarter? month headwinds enough doesn't the can easy line you those now how XXXX, as the there comps in I have so, X% think slower you versus X% still happened? And headwinds Or as then one, into I in like a real-time right Because

James Cannon

organic some achieve We're have go had really to into greater Business & Industrial we Unit go Business certainly footing. that forward disappointed. been business We can we a add there want be principally. we've intent time rate. Certainly, continue growth bookings you contribute but if we the strong we talked growth all headwinds the the to quarter, our certainly or will. the growth Government do we've as to X% we quarter, in to our units as we performance. strong As color? fourth The about, expect expect have Business, The continued all to businesses Commercial the headwinds it's do that, some external so that from a shaped, Carol, you want when targeted on Defense

Carol Lowe

be to & unmanned you're say, Defense of will will just as because programs in what in the and those -- QX ramp. including strong, very estimating. business Noah, especially be Government than would for The is growth I total what's the expected be higher

have you're we'll what numbers total, estimating. slightly higher than So in

Noah Poponak

Can company XXXX see. with now? what X% the organically you see entire right in I grow

James Cannon

Well, we provide want XXXX yet. quite to to guidance specific don't

through February call, the we understand can proper go through obviously, direction. providing fourth And As on we're go plan annual the that. the diligence we'll then be operating quarter, we building that our so to

Noah Poponak

-- you in way permanent. going And is impacting margins? investments, there isn't of them the repeat full that forward nonrecurring doesn't or incremental much thing, agreement the specify much the quantify Carol, can final The year XXXX between how then adjusted, else or right. reporting of expenditures, quarter how XXXX, that's All you're anything total in consent the third and

Carol Lowe

full the the Trade is of be that's what that in out our in year approximately million that year-to-date the is in you non-GAAP approximately ongoing income. through XXXX. amount costs. end called of $XX is below million guidance rate Global adjusted run $XX And year-to-date. And for our We'll reflected at a and there's operating the line to look is So at run that's by reconciliation, million to GAAP GTC, the Compliance net $XX if

cash flat I'll incremental to cash below fund line. not year-over-year note free look -- only but when cash Compliance ongoing Global requirement and the is we're Trade these thing for also you other at cash onetime that our sitting flow that that being from flow costs The basically covering costs or operations, flow are the

good So we that's cash operations. a the from and positive offset of TFM strong that the reflection that contributing so from to flow flow we've maintain had cash can

Noah Poponak

XXXX? those today what know to in are you Do be going

Carol Lowe

informed, started. as be I by will we in So noted, earlier currently It underway. that's our the prepared remarks audit

all licensed. efforts. our towards having the So conducted of results And product major to of has inform greatly be won't will end the that anywhere at remediation sites we're our we a audits have have and where of and until that we QX, that

committed to guess we just now impact having to really we're to negative But until those note cover capital, up more aggressively the TFM right flow it under sure results. manage do on again, would working generate company. we that's a make these that, a So costs want needed the for cash so I without cash we total ramp can to get be

Operator

William with Our next DiPalma Blair. question Louie from comes

Louie DiPalma

Business Unit strength Unit, your quarters? macro bookings we the and platforms, improve with China? seeing the Business and Industrial is next shift exposure the should rate to -- the you're Industrial handhelds, enough Machine that couple the over joint For weakness expect to the growth Vision that of offset to from is higher-priced And the growth

James Cannon

that's continue say headwinds catalyst to with driving standpoint. right in that new now Machine There's I external We have from it in an products. Vision. expect do no we China market one would

instruments in be strong had really unit. we parts after. encouraged kind the of bookings. diversified of led we've of potentially with to Business Unit. a way as This we the the business moved we we've mentioned, that, IBU go OEM strong as what about had they we've big and past bookings of is that cornerstone different Industrial into And are applications As the The see the well. they market kind near-term some inside driver or of with quarter, continue They've

Louie DiPalma

OEM Okay. And the mentioned you of part business. that just

term, for that be could in a to Hornet the systems you strong dominated unmanned envision from U.S. with responder Your DJI, you first a Labs the to relationship? to the and DJI Since But has DJI, supplier vertical like also benefited you the existing that for addition competitors long with responder are being you vertical that. in DJI? very have first do content partner Black are the Over partner and Aeryon partner, you market

James Cannon

largest a And government upon government, do well Hornet often Black in as our being share and payloads. we've enterprise Hornet for adoption with seen Aeryon They government SkyRaider SkyRanger are DoD across amount markets, and federal Hornet, own price-sensitive develop Black and now, SkyRanger, Defense. particularly upon stay the right of provide with on applications, can we that to the are the are as of constraint. principally. certainly so we And that be federal focused market continue, upon commercial Department and particular, first responder customer customer. them tremendous good But Labs have budgets in focused payloads focused to as DJI applications market. their now, our Raider Black principally

Louie DiPalma

Veoneer What integrator have contract night? question. they partner? announcement last only are one role in from And last your your And does

James Cannon

Frank, are commentary? They partner. integrator exclusive of relationship ours, some our with a you and to want not are preferred They add a have them. we partner do long very

Frank Pennisi

X Essentially, they're Tier supplier. we're Tier X and

the say other principally of or large working with that aligned We number -- a Tier Veoneer. And OEMs but are, whether essentially, in directly manufacturers, I'll basically we're fact, with Xs. with with that's

Operator

Ladies the I'd turn we've to comments. At Chief time, Cannon, reached like end call Jim this Officer, and President question-and-answer session. back of Executive the the gentlemen, closing and to for

James Cannon

like call for today in operator. joining you, and you all to for In closing, I'd of the Thank your interest our company. thank

would report world fourth team updating results hard our mission. thank XXXX your X,XXX the a February. you for progress year the our our more on great you, members to As full and look forward passion I to like when have than We and FLIR also Thank to work, always, around quarter day. dedication we and in

Operator

conference. today's concludes This

participation. your thank your at we disconnect may and time, for this you You lines

Teledyne FLIR (FLIR) 31 Oct 192019 Q3 Earnings call transcript