FLIR Systems' Q2 Earnings Lag on Currency Woes, Up Y/Y - Analyst Blog
FLIR Systems Inc. FLIR reported second-quarter 2015 earnings of 36 cents per share, which missed the Zacks Consensus Estimate by couple of cents. However, it came above the year-ago quarter figure of 31 cents.
After-tax restructuring charges of $0.3 million impacted net earnings in the second quarter of 2015. However, restructuring initiatives undertaken by the company supported the bottom-line performance.
Inside the Headlines
Total revenue came in at $392.9 million, an increase of around 6.4% year over year. Also, revenues outpaced the Zacks Consensus Estimate of $384 million.
FLIR Systems’ “Commercially-Developed, Military Qualified” (“CDMQ”) model significantly benefited it in the government and military markets, thereby contributing to its top-line performance. However, currency fluctuations impacted the company’s second-quarter revenues, leading to a decline of almost $20 million.
As for the segments, Surveillance revenues fell 5% year over year to $107.8 million; Instruments revenues rose 7% on a year-over-year basis to $90.3 million; revenues from OEM & Emerging Markets tumbled 9% from the year-ago quarter to $46.3 million; and revenues from the Maritime segment slid 6% year over year to $52 million.
On the other hand, Security revenues jumped 34% to $60 million and Detection revenues soared 77% to $36.5 million; both on a year-over-year basis. Massive improvement in sales of these two segments more than offset the decline from currency fluctuations, thereby driving overall growth.
FLIR's order backlog for the coming 12 months stood at about $536 million as of Jun 30, 2015, marking a decline of 2% over the prior-year quarter.Operating income came in at $70 million compared with $59.4 million in the prior-year quarter. Pre-tax charges related to restructuring initiatives impacted operating income by $0.5 million during the quarter.
Liquidity & Cash Flow
At the end of the quarter, the company's cash and cash equivalents stood at $560.2 million, compared with $531.4 million at 2014-end. Long-term debt stood at $350.7 million, down from $358.0 million as on Dec 31, 2014.
Cash flow from operations stood at $48.9 million in second-quarter 2015, as against $70.6 million in the comparable year-ago quarter.
2015 Guidance Reiterated
On the basis of the second-quarter 2015 results, FLIR Systems reiterated its full-year guidance. The company expects net earnings per share in the range of $1.60–$1.70. Also, revenues are expected within $1.55–$1.6 billion.
Dividend Update
FLIR Systems declared a quarterly cash dividend of 11 cents per share, payable on Sep 4, 2015, to shareholders of record as of Aug 21.
Our Take
Though FLIR Systems successfully executed its strategies during the quarter, strong currency headwinds proved to be a major concern. However, innovation in thermal and other sensing technologies have helped the company improve its position in the market. Going forward, the company believes its restructuring initiatives and focus on innovation will contribute to profitability growth.
FLIR Systems currently has a Zacks Rank #4 (Sell). Better-ranked stocks include AO Smith Corp. AOS, L-3 Communications Holdings Inc. LLL and Dycom Industries Inc. DY. While L-3 Communications and AO Smith Corp carry a Zacks Rank #2 (Buy), Dycom Industries sport a Zacks Rank #1 (Strong Buy).
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