FLIR Systems Inc
) fourth-quarter 2013 earnings (excluding one-time items) came in
at 35 cents, down 32.7% from 52 cents in the year-ago-quarter.
Quarterly earnings also missed the Zacks Consensus Estimate by
10.3% or 4 cents.
The quarterly results were primarily impacted by the weakness
in order flow from U.S. Government-funded customers.
Total revenue was $400.3 million in the reported quarter, up
3.6% year over year. The increase was primarily driven by higher
sales in the Commercial Systems division, was partially offset by
decline in the Government system's division.
FLIR's backlog was approximately $490 million as of Dec 31,
2013, marking a decrease of $33 million during the quarter.
division's revenues increased 15% to $244.6 million. Within the
division, revenue from the Thermal Vision and Measurement segment
grew 16% to $208.5 million, while the Raymarine segment
contributed $36.1 million to the top line during the fourth
quarter, which was up 10% from the prior year.
Backlog in the Commercial Systems division was $196 million,
up $8 million during the fourth quarter.
division's revenues came in at $155.7 million, declining 10% year
over year. The decline was mainly attributable to Surveillance
segment which declined 9% year over year and the Integrated
Systems segment which reported a 27% decline. However, the
Detection System segment reported a 3% year-over-year
increase to $13.2 million.
Backlog for the Government Systems division at the end of the
quarter was $294 million, declining $41 million from the prior
Income and Expenses
Operating income in the reported quarter was $37.8 million
compared with $100.1 million in fourth-quarter of 2012. Selling
and general expenses increased 24.9% to $88.0 million. Research
and development expenses rose 14% to $38.4 million from $33.7
million in the comparable year-ago quarter.
Balance Sheet & Cash Flow
Exiting the year, the company's cash and cash equivalents
improved significantly to $542.5 million from $321.7 at year-end
2012. Long-term debt was $372.5 million, compared with $248.3
million at the end of 2012.
Cash flow from operations declined 7% to $105.2 million from
$112.8 million in the comparable year-ago quarter. However, cash
flow from operations for fiscal 2013 was at an all-time high of
$355 million, reflecting a 24% increase from 2012. This increase
was primarily attributable to lower working capital requirements.
Dividend and Share Repurchase
Following the earnings release, the board of directors
approved a quarterly cash dividend of 10 cents per share,
reflecting an increase of 11% over the previous payout of 9
cents. The new dividend will be paid on Mar 7, 2014, to
shareholders of record as of close of business on Feb 19,
During the fourth quarter, FLIR repurchased 1 million shares
of its common stock at an average price of $28.95 per share.
Just before the earnings release, the company announced
changes in its management structure and also restructured its
The company has appointed Tom Surran as FLIR's Senior Vice
President and Chief Operating Officer. Following, this change,
the company will eliminate its commercial and government
The company has modified its reporting segments to reflect the
changing dynamics of the market and to better align its strategy
with its customer base. Beginning first quarter of 2014, the
company will report results in 6 segments which will include:
Surveillance: This will include the current Surveillance
business and also the Integrated System segment.
Detection: This will include the current Detection business
and the detection-oriented programs of the Integrated Systems
Instruments: This will comprise the thermography and test and
measurement business, targeted primarily at commercial and
Security: This will include the Lorex consumer security
cameras and the FLIR-branded professional thermal and visible
Maritime: this will encompass Raymarine and FLIR-branded
maritime thermal imaging products previously part of TVM.
OEM and Emerging: this segment will include OEM Personal
Vision Systems, mobile accessories and intelligent traffic
solutions lines of business.
FLIR Systems believes that by streamlining its organization,
it can further strengthen company-wide communication,
collaboration and cooperation, while creating a logical structure
that will further leverage its vertical integration and focuses
on core markets.
Along with the earnings release, management provided its
guidance for 2014. FLIR expects revenues in 2014 to be in the
range of $1.45 billion to $1.55 billion and earnings (excluding
restructuring charges associated with the business realignment)
to be in the range of $1.40 to $1.50 per share.
FLIR Systems currently carries a Zacks Rank #3 (Hold). Some
better ranked companies in the industry that are worth a look
Alliant Techsystems Inc
BAE Systems plc
Orbital Sciences Corp
). All three sport a Zacks Rank # 1 (Strong Buy).
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