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FLIR Systems Inc. (FLIR - Analyst Report) released its first-quarter 2012 results before the market opened today, reporting earnings from continuing operations of 31 cents, below the Zacks Consensus Estimate of 33 cents and prior-year earnings of 32 cents. 

Total Revenue

Total revenue was $348.5 million, a decrease of 7% year over year. Total backlog at the end of March 31, 2011 was about $457 million, up $2 million during the quarter.

Divisional Revenue 

Commercial Systems division’s revenue was $202.3 million in the quarter, up 4% year over year. Within the Commercial Systems division, the Thermal Vision and Measurement segment revenue increased by 7% to $155.7 million. Commercial Systems' Raymarine segment revenue was $46.6 million, down 12% year over year.

Government Systems division’s revenue came in at $146.1 million in the quarter, down 19% year over year. The division was affected by a difficult market environment. Within the division, the Surveillance segment revenue declined 24% to $114.6 million. Detection segment revenue was $19.4 million, up 8% while Integrated Systems segment revenue was $12.2 million, down 5%.

Income and Expenses         

Operating earnings, for the quarter, was $68.3 million compared with $76.1 million in the prior-year period. Selling and general expense was $77.9 million compared with $82.6 million whereas research and development expense was $36.6 million compared with $37.6 million.

Balance Sheet

Cash and cash equivalents were $448.2 million at the end of the quarter with shareholders equity of $1.62 billion.

Cash flow from operations amounted to $49 million during the quarter. The company repurchased 1 million shares for $25.39 per share.

Dividend

With its earnings result, the company declared a dividend of 7 cents per share. The dividend is payable on June 8, 2012 to shareholders of record as of May 21, 2012.

Outlook                                               

FLIR Systems expects earnings per share for 2012 to be in the range of $1.60 to $1.70. Total revenue is expected to be in the range of $1.55 billion to $1.65 billion. The company expects its Commercial business to improve as it moves ahead.

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 - Analyst Report) and Lockheed Martin Corporation (LMT - Analyst Report).

We continue to maintain a Neutral rating on FLIR System for the long term. The company has a Zacks #3 Rank (Hold recommendation) over the next one-to-three months.

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