FLIR Systems (FLIR) Reports In-Line Earnings In Q1, Sales Up

FLIR Systems Inc. (NASDAQ:FLIR) broke its recent trend of missing estimates, as its first-quarter 2017 earnings per share of 36 cents came in line with the Zacks Consensus Estimate. The figure rose 12.5% over the prior-year quarter tally, as top-line growth and higher gross margin boosted profits.

GAAP net earnings for the quarter came in at $42.6 million, significantly higher than the year-ago quarter’s tally of $1.1 million.

Inside the Headlines

The company’s top line grew a remarkable 7.2% year over year to $406.8 million. However, revenues missed the Zacks Consensus Estimate of $408 million by a whisker. Recent acquisitions and several product launches in existing businesses bolstered the top line.

Phenomenal growth in the company’s OEM & Emerging Markets segment and strength in the Detection segment drove the overall top line, and more than offset the decline in sales experienced in the four remaining segments.

As for the segments, OEM & Emerging Markets revenues continued their striking growth trajectory, rising an impressive 77.2% over the prior-year quarter to $84.8 million, whileDetection revenues recorded growth of 8.7% year over year to $31.8 million. The revenues of OEM & Emerging Markets were partially driven by the addition of the Integrated Imaging Solutions line of business from the recent acquisition of Point Grey Research.

However, all other segments reported a decline in sales.Maritime segment revenues were down 6.1% year over year to $48.6 million.Surveillance segment revenues also contracted 4.4% year over year to $118.7 million.

In addition, Instruments revenues had another quarter of decline, decreasing 2% year over year to $77.9 million.

Revenues from the Security segment also had a disappointing performance this quarter, falling 4.2% over the prior-year quarter to $45.1 million.

FLIR Systems' backlog of firm orders for delivery within the next 12 months came in at $608 million, reflecting an increase of 3% from the tally at the end of year-ago quarter.

Adjusted operating income came in at $69.6 million compared with $62.2 million in the prior-year quarter. Sturdy top-line growth drove the rise in income.

Liquidity & Cash Flow

As of Mar 31, 2017, the company's cash and cash equivalents were $397.4 million compared with $361.3 million a year back. Long-term debt fell to $494.7 million compared with $501.9 million as at Dec 31, 2016.

Cash flow generated from operating activities in the quarter came in at $75.1 million, significantly higher than $45.9 million generated in the year-earlier quarter. The rise can be largely attributed to sustained improvements in productivity of working capital.

FLIR Systems, Inc. Price, Consensus and EPS Surprise

Dividend & Share Repurchase

Concurrent with the earnings report, FLIR Systems announced a quarterly cash dividend of 15 cents per share, payable on Jun 9, 2017, to shareholders of record as on May 26.

Last quarter, FLIR Systems had approved a new share repurchase program, authorizing the buyback of up to 15 million shares over the next two years. These shares represent around 11% of the company’s outstanding common stock as of Dec 31, 2016.

Guidance

FLIR Systems reiterated its outlook for 2017 and continues to expect adjusted earnings to lie in the range of $1.81–$1.91 per share, on revenues of $1.78–$1.83 billion. The figures represent year-over-year growth of about 7–13% in adjusted earnings and 7–10% growth in revenues.

In fact, the company expects to see an uptick in organic growth second quarter onwards.

Going Forward

FLIR Systems has been expanding its market share in nearly all of its served markets. The company anticipates to build up on the strong backlog going ahead in 2017. Also, it has several new product platforms in the pipeline, which it expects to launch this year, which should drive growth.

In addition, the company’s improved working capital utilization is resulting in robust cash flow that supplements its strength.

However, some of the company’s segments are currently under pressure, which might continue to hurt the company’s operations. Moreover, profitability of this Zacks Rank #3 (Hold) company depends on its ability to check the rise in costs during the second half of the year. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

FLIR Systems competes with peers like Arotech Corporation (NASDAQ:ARTX) , L3 Technologies, Inc. (NYSE:LLL) and Raytheon Company (NYSE:RTN) .

Looking for Ideas with Even Greater Upside?

Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more.

Click here for a peek at this private information >>