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Oct 25, 2007
FLIR Systems Announces Third Quarter 2007 Financial Results
FLIR Systems Announces Third Quarter 2007 Financial ResultsPORTLAND, OR, Oct 25, 2007 (MARKET WIRE via COMTEX News Network) -- FLIR Systems, Inc. (NASDAQ: FLIR) today announced financial results for the third quarter ended September 30, 2007. Revenue was $191.1 million, up 43% compared to third quarter 2006 revenue of $133.2 million. Operating income for the quarter was $51.8 million, up 53% from $34.0 million in the third quarter of 2006. Net income for the quarter was $34.8 million, or $0.45 per diluted share, compared with net income of $27.1 million, or $0.36 per diluted share, in the third quarter a year ago.

Year-to-date revenue for the nine months ended September 30, 2007 was $536.8 million, up 38% compared to $389.1 million for the first nine months of 2006. Operating income for the first nine months of 2007 was $129.0 million, up 58% from $81.9 million during the first nine months of 2006. Net income for the first nine months of 2007 was $90.1 million, or $1.18 per diluted share, compared with net income of $61.1 million, or $0.80 per diluted share, in the first nine months a year ago.

Revenue from the Company's Government Systems division increased 70% over the third quarter of 2006, to a record $96.9 million, driven by strength across all served markets, including airborne, land, and maritime. Revenue from the Company's Commercial Vision Systems division increased 29% over the third quarter of last year, to $34.2 million, reflecting strong growth in the security and transportation markets. Revenue from the Company's Thermography division increased 21% over the third quarter of last year, to $60.0 million, due to strong demand for the InfraCAM™ and GasFindIR™ product lines and the introduction of the new T-Series product line.

The backlog of firm orders for delivery within the next twelve months was approximately $393 million at September 30, 2007, an increase of $82 million from $311 million at June 30, 2007. Backlog in the Government System's division was $316 million, up $71 million during the quarter, due to orders for a wide variety of products for both U.S. and international customers. Backlog in the Commercial Vision System's division was $59 million, up $5 million during the quarter. Backlog in the Thermography division was $18 million, up $7 million during the quarter, primarily due to orders for the company's GasFindIR™ and new ThermaCam™ T-Series products.

Cash provided by operations during the quarter was $31 million, primarily due to the net income earned during the quarter. At September 30, 2007, cash and cash equivalents were $170 million, up $18 million from $152 million at June 30, 2007.

The Company announced today it has entered into an agreement to acquire the stock of Extech Instruments Corporation, a supplier of test and measurement equipment based in Waltham, MA, for $40 million cash, subject to certain closing adjustments. For the year ending December 31, 2006, Extech reported revenue of $39.2 million. The addition of Extech will expand FLIR's access to key distribution channels for its emerging low-price Thermography products and provide access to low-cost manufacturing in Asia. The transaction is subject to various standard closing conditions and is expected to close in the fourth quarter, and be neutral to earnings in 2008, and accretive in subsequent years.

The Company also announced today that its Board of Directors has approved a two-for-one split of its common stock. As a result of the stock split, shareholders will receive one additional share of common stock for every share held on the record date of November 12, 2007. The additional shares will be distributed on or about December 10, 2007 by the Company's transfer agent, Mellon Investor Services.

"Q3 was another outstanding quarter for the Company, as we set quarterly records for orders, backlog, and revenue," noted Earl Lewis, President and CEO. "Demand was excellent across all three divisions, backlog increased by $82 million, and operating income improved to 27%. In addition, we have recently announced two strategic acquisitions that augment our existing business and position the Company for growth in key markets. Based on the quarter's results, and the expectations for the remainder of the year, we are once again increasing our guidance for the year."

Updated Revenue and Earnings Outlook for 2007

Based on the financial results for the quarter, and the outlook for the remainder of the year, the Company is increasing its revenue and earnings guidance for 2007. The Company currently expects net revenue in fiscal 2007 to be in the range of $755 million to $770 million, and net earnings to be in the range of $1.73 to $1.78 per diluted share. This guidance assumes a tax rate for the year of approximately 29%, and an average share count of approximately 80 million diluted shares.

Conference Call

FLIR has scheduled a conference call at 9:00 am EDT today. A simultaneous Webcast will be available from the Investor Relations link at A replay will be available after 1:00 PM EDT at this same internet address. For a telephone replay, dial (800) 642-1687, Conference ID# 18377731 after 1:00 PM EDT.

About FLIR Systems

FLIR Systems, Inc. is a world leader in the design, manufacture, and marketing of thermal imaging and stabilized camera systems for a wide variety of thermography and imaging applications including condition monitoring, research and development, manufacturing process control, airborne observation and broadcast, search and rescue, drug interdiction, surveillance and reconnaissance, navigation safety, border and maritime patrol, environmental monitoring and ground-based security. Visit the Company's web site at

Forward-Looking Statements

The statements in this release by Earl R. Lewis, the statements regarding the acquisition of Extech Instruments Corporation, and its expected effect on the Company's financial results for 2008 and subsequent years, and the statements in the section captioned "Updated Revenue and Earnings Outlook for 2007" 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 the Company'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: the possibility that the Extech transaction will not close or that the closing may be delayed, the possibility that the Company will experience difficulties in the integration of the operations, employees, strategies, technologies and products of Extech if the transaction does close, the potential inability to realize expected benefits and synergies from the Extech transaction, changes in demand for the Company's products, product mix, the timing of customer orders and deliveries, the impact of competitive products and pricing, the Company's continuing compliance with US export control laws and regulations, the timely receipt of export licenses for international shipments, 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 Company's continuing compliance with US export control laws and regulations, the timely receipt of export licenses for international shipments, the continuing eligibility of the Company to act as a federal contractor, the amount and availability of appropriated government procurement funds and other risks discussed from time to time in the Company'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 the Company 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.
            (In thousands, except per share amounts)(Unaudited)
                                Three Months Ended     Nine Months Ended
                                  September 30,           September 30,
                                --------------------  --------------------
                                  2007       2006       2007       2006
                                ---------  ---------  ---------  ---------
Revenue                         $ 191,104  $ 133,212  $ 536,763  $ 389,101
Cost of goods sold                 84,081     57,501    240,772    178,631
                                ---------  ---------  ---------  ---------
  Gross profit                    107,023     75,711    295,991    210,470
Operating expenses:
  Research and development         15,692     13,928     51,623     44,323
  Selling, general and
   administrative                  39,508     27,816    115,400     84,265
                                ---------  ---------  ---------  ---------
    Total operating expenses       55,200     41,744    167,023    128,588
    Earnings from operations       51,823     33,967    128,968     81,882
Interest expense                    2,245      2,266      7,549      6,143
Other income, net                    (957)    (1,448)    (4,535)    (4,874)
                                ---------  ---------  ---------  ---------
  Earnings before income taxes     50,535     33,149    125,954     80,613
Income tax provision               15,770      6,079     35,840     19,473
                                ---------  ---------  ---------  ---------
  Net earnings                  $  34,765  $  27,070  $  90,114  $  61,140
                                =========  =========  =========  =========
Net earnings per share:
  Basic                         $    0.51  $    0.40  $    1.35  $    0.89
                                =========  =========  =========  =========
  Diluted                       $    0.45  $    0.36  $    1.18  $    0.80
                                =========  =========  =========  =========
Weighted average shares
  Basic                            67,565     67,478     66,788     66,577
                                =========  =========  =========  =========
  Diluted                          79,768     79,052     78,946     80,256
                                =========  =========  =========  =========
                        FLIR SYSTEMS, INC.
                      (In thousands)(Unaudited)
                                              September 30,  December 31,
                                                  2007           2006
                                              -------------- --------------
Current assets:
   Cash and cash equivalents                  $      169,943 $      138,623
   Accounts receivable, net                          177,834        167,502
   Inventories, net                                  174,352        135,928
   Prepaid expenses and other current assets          60,688         29,155
   Deferred income taxes, net                         15,684         15,262
                                              -------------- --------------
        Total current assets                         598,501        486,470
Property and equipment, net                          113,885         92,156
Deferred income taxes, net                             2,600          3,687
Goodwill                                             163,038        159,802
Intangible assets, net                                36,450         40,917
Other assets                                          17,723         15,116
                                              -------------- --------------
                                              $      932,197 $      798,148
                                              ============== ==============
Current liabilities:
   Notes payable                              $           -- $       45,500
   Accounts payable                                   53,302         40,608
   Deferred revenue                                   19,453         13,709
   Accrued payroll and related liabilities            34,347         25,831
   Accrued product warranties                          5,597          5,174
   Advance payments from customers                     7,868         10,064
   Other current liabilities                          14,383         12,149
   Accrued income taxes                                   --         17,331
   Current portion of long-term debt                       7              7
                                              -------------- --------------
        Total current liabilities                    134,957        170,373
Long-term debt                                       207,672        207,024
Deferred tax liability, net                            4,667          2,392
Accrued income taxes                                   7,677             --
Pension and other long-term liabilities               20,823         19,607
Commitments and contingencies
Shareholders' equity                                 556,401        398,752
                                              -------------- --------------
                                              $      932,197 $      798,148
                                              ============== ==============

Company Contact:
Tony Trunzo
+1 503.498.3547

SOURCE: FLIR Systems, Inc.