FLIR Systems Inc. (FLIR) released its third-quarter 2011 earnings results before the market opened today, reporting earnings from continuing operations of 40 cents, above the Zacks Consensus Estimate of 37 cents and prior-year earnings of 39 cents.
Earnings in the quarter was affected by net after tax impact of the severance cost, excluding which earnings per share in the quarter came in at 43 cents.
Total Revenue
Total revenue was $371.3 million, an increase of 12% year over year. FLIR’s revenue increased in both its division, adding to total revenue growth.
Total backlog at the end of September 30, 2011 was about $546 million, up $60 million during the quarter.
Divisional Revenue
Commercial Systems division was $196.4 million, up 16% year over year. Within the Commercial Systems division, the Thermal Vision and Measurement segment revenue increased by 22% to $161.0 million. Commercial Systems' Raymarine segment revenue was $35.4 million.
Government Systems division was $174.9 million in the quarter, up 7% year over year. Within the division, the Surveillance segment revenue declined 14% to $139.8 million. Detection segment revenue was $21.2 million and Integrated Systems segment revenue was $13.9 million.
Income and Expenses
Operating earnings, for the quarter, was $85.4 million compared with $85.8 million in the prior-year period. Selling and general expense was $81.3 million compared with $67.8 million and research and development expense was $35.2 million compared with $28.5 million.
Balance Sheet
Cash and cash equivalents were $374.5 million at the end of the quarter with shareholders equity of $1.56 billion.
The company's board of directors declared a quarterly cash dividend of 6 cents per share on FLIR common stock, payable on December 9, 2011, to shareholders of record as of the close of business on November 21, 2011.
Outlook
FLIR Systems reaffirmed its earnings per share outlook for 2011 of $1.33 to $1.38. Excluding the net after tax impact of the second quarter litigation settlement and the third quarter severance costs, earnings per share is expected to be in the range of $1.50 to $1.55. The company expects 2011 revenue to be in the range of $1.55 billion to $1.6 billion, down from its prior guidance of $1.6 billion to $1.65 billion.
The company has developed extensive competencies in the design and integration of numerous capabilities and payloads into integrated systems or sub-systems. Competencies such as stabilization, packaging and systems integration allow it to effectively combine a wide variety of technologies and payloads to design and manufacture complex systems to suit its customers’ needs.
However, FLIR derives significant revenue from contracts or subcontracts with the U.S. government agencies. A significant reduction in the purchase of its products by these agencies would have an adverse impact on its business. The funding of contracts awarded to the company depends on the overall budget of the United States government and appropriation process, which is beyond its control. Major competitors of FLIR Systems are L-3 Communications Holdings Inc. (LLL) and Lockheed Martin Corporation (LMT).
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.
We continue to maintain an Underperform rating on FLIR System for the long term. The company has a Zacks #4 Rank (Sell recommendation) over the next one-to-three months.
FLIR SYSTEMS (FLIR): Free Stock Analysis Report
L-3 COMM HLDGS (LLL): Free Stock Analysis Report
LOCKHEED MARTIN (LMT): Free Stock Analysis Report
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment