FLIR Systems Announces Fourth Quarter and Full Year 2015 Financial Results

WILSONVILLE, OR--(Marketwired - Feb 11, 2016) - FLIR Systems, Inc. (NASDAQ: FLIR) today announced financial results for the fourth quarter and full year ended December 31, 2015. Fourth quarter 2015 revenue was $437.6 million, up 1% compared to fourth quarter 2014 revenue of $434.4 million. On a constant currency basis, fourth quarter 2015 revenue was up 3% versus the prior year. Operating income in the fourth quarter was $93.5 million, compared to $87.4 million in the fourth quarter of 2014. Operating income was impacted by pretax charges related to previously-announced restructuring initiatives of $0.3 million in the fourth quarter of 2015 and $1.0 million in the fourth quarter of 2014.

Fourth quarter 2015 net income was $70.2 million, or $0.51 per diluted share, compared with net income of $72.8 million, or $0.51 per diluted share in the fourth quarter a year ago. Net income in the fourth quarter of 2015 was impacted by an after-tax gain on the sale of an investment of $12.7 million, offset by after-tax restructuring charges of $0.2 million and discrete tax charges of $7.4 million, netting to a $0.04 benefit to earnings per diluted share. Net income in the fourth quarter of 2014 was impacted by after-tax restructuring charges of $0.7 million and a discrete tax benefit of $9.4 million, netting to a $0.06 benefit to earnings per diluted share. Cash provided by operations in the fourth quarter reached $78.3 million, increasing 25% over the fourth quarter of 2014.

Revenue from the Surveillance segment was $150.7 million, a decrease of 5% from the fourth quarter results last year. The Instruments segment contributed $98.6 million of revenue during the fourth quarter, down 5% from the prior year but flat on a constant currency basis. The Security segment recorded revenue of $68.4 million in the fourth quarter, up 21% from the prior year. FLIR's OEM & Emerging Markets segment had $49.2 million of revenue, a decrease of 2% from the prior year. Revenue from the Maritime segment was $36.0 million, and was down 10% from the fourth quarter of 2014 and down 4% on a constant currency basis. The Detection segment contributed $34.7 million of revenue, an increase of 32% from the prior year.

For the full year, revenue was $1,557.1 million, up 2% compared to $1,530.7 million for the year ended December 31, 2014. On a constant currency basis, full year 2015 revenue grew 6% over 2014. Operating income for 2015 was $305.8 million compared to $259.2 million in 2014, an increase of 18% for the year. Net income for 2015 was $241.7 million, or $1.72 per diluted share, compared with 2014 net income of $200.3 million, or $1.39 per diluted share. Cash provided by operations during 2015 was $275.8 million, which compares to $226.2 million in the prior year and represents a 22% increase.

FLIR's backlog of firm orders for delivery within the next twelve months was approximately $604 million as of December 31, 2015, an increase of $36 million, or 6%, during the quarter and an increase of $56 million, or 10%, compared to $547 million at the end of 2014.

"The fourth quarter was in-line with our expectations. While revenues were up only slightly year over year given the strong dollar, our operating profitability improved due to strong execution and focus on costs. Cash flow from operations grew considerably compared to the fourth quarter of 2014 as we improve our working capital utilization. Additionally, sales bookings growth of over 20% during the fourth quarter resulted in the highest ending backlog balance since 2008," said Andy Teich, President and CEO of FLIR. "We were pleased with the financial performance over the full year 2015, with operating income growing 18% and earnings per share up 24%. As we look forward to 2016, we intend to grow in our existing and new markets through continued product innovation, operational discipline, strategic marketing, and opportunistic use of our capital."

Revenue and Earnings Outlook for 2016

FLIR also announced today that it currently expects revenue in 2016 to be in the range of $1.6 billion to $1.65 billion and net earnings to be in the range of $1.60 to $1.70 per diluted share. This guidance assumes a full year 2016 effective tax rate of 26%, excluding the impact of any future discrete items.

Dividend Increase and Declaration

FLIR's Board of Directors has approved a quarterly cash dividend of $0.12 per share on FLIR common stock, an increase of 9% over the previous paid quarterly dividend of $0.11 per share. The Board of Directors has declared the dividend payable on March 4, 2016, to shareholders of record as of close of business on February 19, 2016.

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 and the accompanying summary presentation may be accessed online from a link in the Events 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 fourth quarter and historical financial data may be accessed online from the Financial Info Database link under the Financials & Filings section 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

Statements in this release by Andy Teich and the statements in the section captioned "Revenue and Earnings Outlook for 2016" above are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements that are not statements of historical fact (including statements containing the words "believes," "plans," "anticipates," "expects," "estimates," or similar expressions) should be considered to be forward looking statements. 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, the impact of FLIR's continuing compliance with U.S. export control laws and regulations and similar laws and regulations, the timely receipt of any necessary 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 filings and reports filed with the Securities and Exchange Commission. 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								Twelve Months Ended
				December 31,								December 31,
				2015				2014				2015				2014
Revenue				$	437,647			$	434,366			$	1,557,067			$	1,530,654
Cost of goods sold					230,337				219,629				803,506				780,281
	Gross profit				207,310				214,737				753,561				750,373
Operating expenses:
	Research and development				31,994				36,096				132,892				142,751
	Selling, general and administrative				81,553				90,258				313,544				331,995
	Restructuring expenses				266				963				1,361				16,383
		Total operating expenses			113,813				127,317				447,797				491,129
		Earnings from operations			93,497				87,420				305,764				259,244
Interest expense					3,397				3,593				14,086				14,593
Interest income					(306	)			(471	)			(1,167	)			(1,405	)
Other (income) expense, net					(14,376	)			1,514				(12,601	)			(3,473	)
		Earnings before income taxes			104,782				82,784				305,446				249,529
Income tax provision					34,578				10,032				63,760				49,268
		Net earnings		$	70,204			$	72,752			$	241,686			$	200,261
Earnings per share:
	Basic			$	0.51			$	0.52			$	1.73			$	1.42
	Diluted			$	0.51			$	0.51			$	1.72			$	1.39
Weighted average shares outstanding:
	Basic				138,000				140,634				139,353				141,143
	Diluted				138,970				142,520				140,774				143,569

FLIR SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)(Unaudited)
				December 31,			December 31,
				2015			2014
ASSETS
Current assets:
	Cash and cash equivalents			$	472,785		$	531,374
	Accounts receivable, net				326,098			354,658
	Inventories				393,092			320,605
	Prepaid expenses and other current assets				95,539			93,691
		Total current assets			1,287,514			1,300,328
Property and equipment, net					272,629			247,094
Deferred income taxes, net					55,429			54,102
Goodwill					596,316			553,335
Intangible assets, net					141,302			133,212
Other assets					53,210			61,240
				$	2,406,400		$	2,349,311
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
	Accounts payable			$	139,540		$	98,173
	Deferred revenue				31,933			27,878
	Accrued payroll and related liabilities				54,806			62,065
	Accrued expenses				40,930			51,810
	Accrued income taxes				201			4,586
	Other current liabilities				53,241			50,045
	Current portion long-term debt				264,694			15,000
		Total current liabilities			585,345			309,557
Long-term debt					93,750			357,986
Deferred income taxes					3,623			9,193
Accrued income taxes					10,457			11,096
Other long-term liabilities					63,710			51,706
Commitments and contingencies
Shareholders' equity					1,649,515			1,609,773
				$	2,406,400		$	2,349,311

FLIR SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)(Unaudited)
				Three Months Ended								Twelve Months Ended
				December 31,								December 31,
				2015				2014				2015				2014
Cash flows from operating activities:
	Net earnings			$	70,204			$	72,752			$	241,686			$	200,261
	Income items not affecting cash:
		Depreciation and amortization			13,069				12,967				49,534				57,245
		Deferred income taxes			3,426				(2,214	)			(13,812	)			(1,242	)
		Stock-based compensation arrangements			6,299				6,782				25,748				30,788
	Gain on sale of certain assets, net				(20,211	)			-				(19,166	)			(4,129	)
	Other non-cash items				3,376				(4,032	)			7,722				(791	)
	Changes in operating assets and liabilities, net of acquisitions				2,172				(23,411	)			(15,898	)			(55,888	)
Cash provided by operating activities					78,335				62,844				275,814				226,244
Cash flows from investing activities:
	Additions to property and equipment, net				(18,118	)			(20,333	)			(68,234	)			(61,262	)
	Business acquisitions, net of cash acquired				(92,260	)			-				(92,260	)			-
	Proceeds from sale of certain assets				25,649				-				25,649				12,000
Cash used by investing activities					(84,729	)			(20,333	)			(134,845	)			(49,262	)
Cash flows from financing activities:
	Repayments of long term debt				(3,750	)			(3,750	)			(15,000	)			(15,000	)
	Repurchase of common stock				(29,812	)			(62,614	)			(123,193	)			(139,238	)
	Dividends paid				(15,206	)			(14,102	)			(61,399	)			(56,513	)
	Proceeds from shares issued pursuant to stock-based compensation plans				3,647				13,413				24,835				47,581
	Excess tax benefit of stock options exercised				4,027				3,456				8,243				11,161
	Other financing activities				(14	)			15				(24	)			(18	)
Cash used by financing activities					(41,108	)			(63,582	)			(166,538	)			(152,027	)
Effect of exchange rate changes on cash					(5,089	)			(12,928	)			(33,020	)			(36,057	)
Net decrease in cash and cash equivalents					(52,591	)			(33,999	)			(58,589	)			(11,102	)
Cash and cash equivalents:
	Beginning of period				525,376				565,373				531,374				542,476
	End of period			$	472,785			$	531,374			$	472,785			$	531,374

FLIR SYSTEMS, INC.
REVENUE AND EARNINGS FROM OPERATIONS BY SEGMENT
(In thousands)(Unaudited)
		Three Months Ended						Twelve Months Ended
		December 31,						December 31,
		2015			2014			2015			2014
REVENUE
	Surveillance	$	150,733		$	157,911		$	503,045		$	519,983
	Instruments		98,599			103,540			347,476			354,124
	Security		68,390			56,398			226,575			179,090
	OEM & Emerging Markets		49,154			50,168			186,722			199,095
	Maritime		36,026			40,103			177,948			192,636
	Detection		34,745			26,246			115,301			85,726
		$	437,647		$	434,366		$	1,557,067		$	1,530,654
EARNINGS (LOSS) FROM OPERATIONS
	Surveillance	$	49,173		$	47,929		$	145,637		$	127,221
	Instruments		34,394			34,277			112,353			98,954
	Security		9,229			10,310			28,140			24,871
	OEM & Emerging Markets		7,558			14,732			41,065			50,250
	Maritime		553			1,335			13,611			24,494
	Detection		9,555			5,438			26,904			10,958
	Other		(16,965	)		(26,601	)		(61,946	)		(77,504	)
		$	93,497		$	87,420		$	305,764		$	259,244

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