FLIR Systems, Inc.
Apr 25, 2014

FLIR Systems Announces First Quarter 2014 Financial Results

WILSONVILLE, OR -- (Marketwired) -- 04/25/14 -- FLIR Systems, Inc. (NASDAQ: FLIR) today announced financial results for the first quarter ended March 31, 2014. Revenue was $351.5 million, up 1% compared to first quarter 2013 revenue of $348.6 million. Operating income in the first quarter was $42.5 million, compared to $69.1 million in the first quarter of 2013, and was impacted by $8.4 million in pretax charges related to previously-announced restructuring initiatives. First quarter 2014 net income was $29.9 million, or $0.21 per diluted share, compared with net income of $51.6 million, or $0.35 per diluted share in the first quarter a year ago. The net after tax impact of the restructuring charges in the first quarter was approximately $6.4 million, or $0.04 per diluted share. Cash provided by operations in the first quarter was $59.8 million, a decrease of 3% compared to the first quarter of 2013.

Revenue from FLIR's Surveillance segment was $117.2 million, a decrease of 1% from the first quarter results last year. The Instruments segment contributed $84.1 million of revenue during the first quarter, up 7% from the prior year. The OEM & Emerging Markets segment had $53.8 million of revenue, an increase of 7% over the prior year. Revenue from the Maritime segment was $52.6 million, and was up 4% over the first quarter of 2013. FLIR's Security segment recorded revenue of $29.3 million in the first quarter, down 1% from the prior year. The Detection segment contributed $14.6 million of revenue, a decrease of 33% from the prior year.

FLIR's backlog of firm orders for delivery within the next twelve months was approximately $514 million as of March 31, 2014, an increase of $24 million during the quarter.

"Our first quarter results were in-line with our expectations. Healthy growth in our commercial-oriented markets was offset by declines in government-funded sectors. We continued executing on our realignment plan, which we believe will be a valuable investment for our long-term performance," said Andy Teich, President and CEO of FLIR. "We expect continued improvement as we move throughout this year and are excited about our product pipeline that is enabled by our new Lepton core."

Revenue and Earnings Outlook for 2014
Based on financial results for the first three 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 June 6, 2014, to shareholders of record as of close of business on May 20, 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 and the year. A simultaneous webcast of the conference call may 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 first quarter and historical financial data 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.

(Tables Below)

FLIR SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)(Unaudited)
Three Months Ended
March 31,
2014 2013
Revenue $ 351,542 $ 348,583
Cost of goods sold 183,010 164,596
Gross profit 168,532 183,987
Operating expenses:
Research and development 36,326 36,684
Selling, general and administrative 81,942 78,173
Restructuring expenses 7,813 -
Total operating expenses 126,081 114,857
Earnings from operations 42,451 69,130
Interest expense 3,708 2,897
Interest income (264 ) (191 )
Other income, net (198 ) (764 )
Earnings from continuing operations before income taxes 39,205 67,188
Income tax provision 9,311 15,552
Net earnings $ 29,894 $ 51,636
Earnings per share:
Basic $ 0.21 $ 0.36
Diluted $ 0.21 $ 0.35
Weighted average shares outstanding:
Basic 140,932 144,629
Diluted 143,828 146,291
FLIR SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)(Unaudited)
March 31, December 31,
2014 2013
ASSETS
Current assets:
Cash and cash equivalents $ 584,095 $ 542,476
Accounts receivable, net 270,165 286,573
Inventories 338,894 344,719
Prepaid expenses and other current assets 98,386 97,574
Deferred income taxes, net 38,660 38,389
Total current assets 1,330,200 1,309,731
Property and equipment, net 232,904 234,041
Deferred income taxes, net 18,079 17,883
Goodwill 574,007 575,701
Intangible assets, net 159,602 154,195
Other assets 52,359 51,808
$ 2,367,151 $ 2,343,359
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 91,965 $ 85,730
Deferred revenue 23,951 28,844
Accrued payroll and related liabilities 60,370 62,069
Accrued expenses 36,159 39,316
Accrued income taxes 138 663
Other current liabilities 43,578 44,893
Current portion long-term debt 15,000 15,000
Total current liabilities 271,161 276,515
Long-term debt 368,892 372,528
Deferred income taxes 12,339 12,255
Accrued income taxes 20,763 19,996
Other long-term liabilities 49,966 48,685
Commitments and contingencies
Shareholders' equity 1,644,030 1,613,380
$ 2,367,151 $ 2,343,359
FLIR SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)(Unaudited)
Three Months Ended
March 31,
2014 2013
Cash flows from operating activities:
Net earnings $ 29,894 $ 51,636
Income items not affecting cash:
Depreciation and amortization 16,470 14,871
Deferred income taxes (235 ) 44
Stock-based compensation arrangements 8,756 5,696
Other non-cash items (1,564 ) 2,374
Changes in operating assets and liabilities, net of acquisitions 6,504 (12,662 )
Cash provided by operating activities 59,825 61,959
Cash flows from investing activities:
Additions to property and equipment, net (9,590 ) (12,648 )
Cash used by investing activities (9,590 ) (12,648 )
Cash flows from financing activities:
Repayments of long term debt (3,750 ) -
Repurchase of common stock (1,766 ) (108,361 )
Dividends paid (14,085 ) (13,106 )
Proceeds from shares issued pursuant to stock-based compensation plans 8,876 1,179
Excess tax benefit of stock options exercised 2,698 234
Other financing activities 252 (22 )
Cash used by financing activities (7,775 ) (120,076 )
Effect of exchange rate changes on cash (841 ) (4,967 )
Net increase (decrease) in cash and cash equivalents 41,619 (75,732 )
Cash and cash equivalents, beginning of period 542,476 321,739
Cash and cash equivalents, end of period $ 584,095 $ 246,007
FLIR SYSTEMS, INC.
REVENUE AND EARNINGS FROM OPERATIONS BY SEGMENT
(In thousands)(Unaudited)
Three Months Ended
March 31,
2014 2013
REVENUE - EXTERNAL CUSTOMERS
Surveillance $ 117,201 $ 117,987
Instruments 84,056 78,550
OEM and Emerging Markets 53,801 50,285
Maritime 52,575 50,462
Security 29,309 29,472
Detection 14,600 21,827
$ 351,542 $ 348,583
EARNINGS (LOSS) FROM OPERATIONS
Surveillance $ 20,361 $ 33,726
Instruments 20,450 20,024
OEM and Emerging Markets 11,711 14,596
Maritime 8,830 8,107
Security 1,686 4,389
Detection (1,800 ) 2,545
Other (18,787 ) (14,257 )
$ 42,451 $ 69,130

Company Contact:
Shane Harrison
+1 503.498.3547
www.flir.com

Source: FLIR Systems, Inc.

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