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FLIR Systems Announces Second Quarter 2014 Financial Results

WILSONVILLE, Ore., July 24, 2014 (GLOBE NEWSWIRE) -- FLIR Systems, Inc. (Nasdaq:FLIR) today announced financial results for the second quarter ended June 30, 2014. Revenue was $369.4 million, down 5% compared to second quarter 2013 revenue of $389.3 million. Operating income in the second quarter was $59.4 million, compared to $70.3 million in the second quarter of 2013, and was impacted by $3.5 million in pretax charges related to previously-announced restructuring initiatives. Second quarter 2014 net income was $44.8 million, or $0.31 per diluted share, compared with net income of $50.2 million, or $0.35 per diluted share in the second quarter a year ago. The net after tax impact of the restructuring charges in the second quarter was approximately $2.7 million, or $0.02 per diluted share. Cash provided by operations in the second quarter was $70.6 million.

Revenue from FLIR's Surveillance segment was $105.8 million, a decrease of 28% from the second quarter results last year. The Instruments segment contributed $84 million of revenue during the second quarter, up 5% from the prior year. The OEM & Emerging Markets segment had $59 million of revenue, an increase of 21% over the prior year. Revenue from the Maritime segment was $55.2 million, and was up 1% over the second quarter of 2013. FLIR's Security segment recorded revenue of $44.7 million in the second quarter, up 30% from the prior year. The Detection segment contributed $20.7 million of revenue, a decrease of 12% from the prior year.

FLIR's backlog of firm orders for delivery within the next twelve months was approximately $548 million as of June 30, 2014, an increase of $34 million during the quarter and an increase of 12% since the beginning of 2014.

"Second quarter results were marked by double-digit growth in our commercially-oriented segments and an improved backlog overall," said Andy Teich, President and CEO of FLIR. "These positive indicators, combined with the anticipated benefit from our restructuring and realignment initiatives, give us confidence in our outlook for the second half of 2014. We are excited about our recent and upcoming product introductions and the momentum being exhibited in many parts of the business."

Revenue and Earnings Outlook for 2014

Based on financial results for the first six months of 2014 and the outlook for the remainder of the year, FLIR is reaffirming its outlook for revenue and earnings per share for the full year 2014. Management expects revenue for 2014 to be in the range of $1.45 billion to $1.55 billion and net earnings excluding restructuring charges associated with the business realignment to be in the range of $1.40 to $1.50 per diluted share.

Dividend Declaration

FLIR's Board of Directors has declared a quarterly cash dividend of $0.10 per share on FLIR common stock, payable September 5, 2014, to shareholders of record as of close of business on August 19, 2014.

Conference Call

FLIR has scheduled a conference call at 11:00 a.m. ET (8:00 a.m. PT) today to discuss its results for the quarter. A simultaneous webcast of the conference call can be accessed online from a link in the Events & Presentations section of www.FLIR.com/investor. A replay will be available after 2:00 p.m. ET (11:00 a.m. PT) at this same Internet address. Summary second quarter and historical financial data, including 2013 quarterly results for each of the new segments, can be accessed online from the Financial Info Database link at www.FLIR.com/investor.

About FLIR Systems

FLIR Systems, Inc. is a world leader in the design, manufacture, and marketing of sensor systems that enhance perception and awareness. FLIR's advanced systems and components are used for a wide variety of thermal imaging, situational awareness, and security applications, including airborne and ground-based surveillance, condition monitoring, navigation, recreation, research and development, manufacturing process control, search and rescue, drug interdiction, transportation safety, border and maritime patrol, environmental monitoring, and chemical, biological, radiological, nuclear, and explosives (CBRNE) threat detection. For more information, visit FLIR's web site at www.FLIR.com.

Forward-Looking Statements

The statements in this release by Andy Teich and the statements in the section captioned "Revenue and Earnings Outlook for 2014" above are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are based on current expectations, estimates, and projections about FLIR's business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors, including the following: changes in demand for FLIR's products, product mix, the timing of customer orders and deliveries, the impact of competitive products and pricing, FLIR's continuing compliance with U.S. export control laws and regulations, the timely receipt of any required export licenses, constraints on supplies of critical components, excess or shortage of production capacity, the ability to manufacture and ship the products in the time period required, actual purchases under agreements, the continuing eligibility of FLIR to act as a federal contractor, the amount and availability of appropriated government procurement funds and other risks discussed from time to time in FLIR's Securities and Exchange Commission filings and reports. In addition, such statements could be affected by general industry and market conditions and growth rates, and general domestic and international economic conditions. Such forward-looking statements speak only as of the date on which they are made and FLIR does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this release, or for changes made to this document by wire services or internet service providers.

FLIR SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts) (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2014 2013 2014 2013
Revenue $ 369,381 $ 389,329 $ 720,923 $ 737,912
Cost of goods sold 186,662 199,288 369,673 363,884
Gross profit 182,718 190,041 351,250 374,028
Operating expenses:
Research and development 36,307 39,601 72,633 76,285
Selling, general and administrative 83,500 80,168 165,442 158,341
Restructuring expenses 3,547 -- 11,361 --
Total operating expenses 123,354 119,769 249,436 234,626
Earnings from operations 59,364 70,272 101,814 139,402
Interest expense 3,629 3,767 7,337 6,664
Interest income (272) (274) (536) (465)
Other income, net (1,070) 175 (1,269) (589)
       
Earnings from continuing operations before income taxes 57,077 66,604 96,282 133,792
Income tax provision 12,319 16,446 21,630 31,998
       
Net earnings $ 44,758 $ 50,158 $ 74,652 $ 101,794
Earnings per share:
Basic $ 0.32 $ 0.35 $ 0.53 $ 0.71
Diluted $ 0.31 $ 0.35 $ 0.52 $ 0.70
Weighted average shares outstanding:
Basic 141,574 142,085 141,255 143,350
Diluted 144,120 143,774 143,964 144,981
FLIR SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands) (Unaudited)
June 30, December 31,
2014 2013
ASSETS
Current assets:
Cash and cash equivalents $ 602,073 $ 542,476
Accounts receivable, net 270,086 286,573
Inventories 350,092 344,719
Prepaid expenses and other current assets 101,684 97,574
Deferred income taxes, net 38,605 38,389
Total current assets 1,362,540 1,309,731
Property and equipment, net 240,023 234,041
Deferred income taxes, net 18,959 17,883
Goodwill 575,522 575,701
Intangible assets, net 147,934 154,195
Other assets 57,187 51,808
$ 2,402,165 $ 2,343,359
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 99,996 $ 85,730
Deferred revenue 24,646 28,844
Accrued payroll and related liabilities 66,191 62,069
Accrued expenses 39,745 39,316
Accrued income taxes 911 663
Other current liabilities 53,277 44,893
Current portion long-term debt 15,000 15,000
Total current liabilities 299,766 276,515
Long-term debt 365,257 372,528
Deferred income taxes 14,097 12,255
Accrued income taxes 20,893 19,996
Other long-term liabilities 50,411 48,685
Commitments and contingencies
Shareholders' equity 1,651,741 1,613,380
$ 2,402,165 $ 2,343,359
FLIR SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2014 2013 2014 2013
Cash flows from operating activities:
Net earnings $ 44,758 $ 50,158 $ 74,652 $ 101,794
Income items not affecting cash:
Depreciation and amortization 14,236 15,231 30,706 30,102
Deferred income taxes (591) (18) 915 26
Stock-based compensation arrangements 8,447 7,630 17,203 13,327
Other non-cash items (2,109) (2,951) (3,599) (577)
Changes in operating assets and liabilities 5,848 65,254 10,536 52,591
Cash provided by operating activities 70,589 135,304 130,413 197,263
Cash flows from investing activities:
Additions to property and equipment, net (16,239) (10,643) (25,828) (23,291)
Business acquisitions, net of cash acquired -- (5,165) -- (5,165)
Other investments -- -- -- --
Cash used by investing activities (16,239) (15,808) (25,828) (28,456)
Cash flows from financing activities:
Proceeds from long term debt -- 150,000 -- 150,000
Repayments of long term debt (3,750) -- (7,500) (3,750)
Repurchase of common stock (41,237) (8,469) (43,003) (116,830)
Dividends paid (14,160) (12,802) (28,245) (25,909)
Proceeds from shares issued pursuant to stock-based compensation plans 20,093 2,706 28,969 3,885
Excess tax benefit of stock options exercised 3,860 236 6,559 469
Other financing activities (264) (946) (14) (966)
Cash used by financing activities (35,458) 130,725 (43,234) 6,899
Effect of exchange rate changes on cash (914) (45) (1,754) (5,012)
Net increase (decrease) in cash and cash equivalents 17,978 250,176 59,597 170,694
Cash and cash equivalents:
Beginning of period 584,095 246,007 542,476 321,739
End of period $ 602,073 $ 496,183 $ 602,073 $ 492,433
FLIR SYSTEMS, INC.
REVENUE AND EARNINGS FROM OPERATIONS BY SEGMENT
(In thousands) (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2014 2013 2014 2013
REVENUE - EXTERNAL CUSTOMERS
Surveillance $ 105,778 $ 147,859 $ 222,978 $ 265,847
Instruments 83,968 80,262 168,023 158,812
OEM and Emerging Markets 58,988 48,633 112,790 98,919
Maritime 55,230 54,679 107,805 105,140
Security 44,735 34,451 74,045 63,922
Detection 20,682 23,445 35,282 45,272
$ 369,381 $ 389,329 $ 720,923 $ 737,912
EARNINGS (LOSS) FROM OPERATIONS
Surveillance $ 18,934 $ 34,076 $ 39,297 $ 67,976
Instruments 21,036 22,920 41,486 42,945
OEM and Emerging Markets 17,613 12,217 29,324 26,639
Maritime 9,714 9,374 18,544 17,481
Security 5,886 3,247 7,572 7,635
Detection 3,153 3,899 1,352 6,444
Other (16,973) (15,461) (35,761) (29,718)
$ 59,363 $ 70,272 $ 101,814 $ 139,402

CONTACT: Company Contact: Shane Harrison +1 503.498.3547 www.flir.comSource:FLIR Systems, Inc.