FLIR Systems Inc. (FLIR) released its second-quarter 2012 results before the market opened today, reporting earnings from continuing operations of 30 cents, above the Zacks Consensus Estimate of 28 cents but below the prior-year earnings of 35 cents.
Total Revenue
Total revenue was $338.3 million, a decrease of 14% year over year. Total backlog at the end of the second quarter 2012 was about $498 million, reflecting a 9% increase over the year-ago quarter.
Divisional Revenue
Commercial Systems division’s revenue was $189.8 million in the quarter, down 12% year over year. Within the Commercial Systems division, the Thermal Vision and Measurement segment revenue decreased by 13% to $142.6 million. Commercial Systems' Raymarine segment revenue was $47.2 million, down 6% year over year.
Government Systems division’s revenue came in at $148.5 million in the quarter, down 16% year over year. Within the division, the Surveillance segment revenue declined 16% to $119.5 million. Detection segment revenue was $15.7 million, down 9% while Integrated Systems segment revenue was $13.3 million, down 26%.
Income and Expenses
Operating earnings, for the quarter, was $60.7 million compared with $41.8 million in the prior-year period. Selling and general expense was $71.8 million, down considerably from $124.1 million in the year-ago quarter, whereas research and development expense was $37.5 million down roughly from $39.5 million in the second quarter of 2011.
Balance Sheet/Cash Flow
Exiting the second quarter 2012, the company had cash and cash equivalents of approximately $429.8 million compared with $448.2 million at the end of the previous quarter. Long-term debt stood at $248.1 million roughly in line with $248.0 million in the previous quarter. Shareholders equity in the quarter was $1.56 billion.
Cash flow from operations amounted to $77.2 million, up compared with $19.4 million in the year-ago quarter. Capital spending was down 6.7% to $13.5 million.
Dividend
During the second quarter 2012, the company expended roughly $64.8 million on repurchasing 3 million shares at an average price of $21.60 and paid dividends amounting to $10.7 million.
Along with its earnings results the company’s Board of Directors also declared a dividend of 7 cents per share. The dividend is payable on September 7 to shareholders of record as of August 20.
Outlook
Management reiterated its recently revised guidance and expects earnings per share for 2012 to be in the range of $1.40 to $1.50, up 1% to 9% over 2011. Total revenue is anticipated within $1.4-$1.5 billion range, down 3%-9% year over year.
FLIR Systems Inc. is a leader in design, manufacture and marketing of thermal imaging systems. Its products are used in a wide variety of applications in commercial, industrial and government markets, internationally as well as domestically. It offers a wide variety of system configurations to suit specific customer requirements.
The company’s business is organized into three divisions: Government Systems, Commercial Vision Systems and Thermography Products. Major competitors of FLIR Systems are L-3 Communications Holdings Inc. (LLL) and Lockheed Martin Corporation (LMT).
We continue to maintain an Underperform recommendation on FLIR System. The stock also bears a Zacks #4 Rank (Sell) over the next one-to-three months.
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