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FLIR Systems (FLIR) Q3 Earnings Beat, Revenue View Down

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FLIR Systems Inc.’s (FLIR - Free Report) third-quarter 2019 adjusted earnings of 59 cents per share surpassed the Zacks Consensus Estimate of 58 cents by 1.7%. Also, the reported figure increased 3.5% from 57 cents in the prior-year quarter.

The company reported GAAP earnings of 46 cents per share compared with 52 cents in the year-ago quarter. The year-over-year downside can be attributed to higher operating expenses and increase in amortization of intangible assets associated with the previously announced acquisitions.

Operational Performance

FLIR Systems’ revenues increased 8.4% year over year to $471.2 million in the reported quarter. However, the top line missed the Zacks Consensus Estimate of $486 million by 3%. Impressive performance by the Government and Defense segment led to year-over-year increase in the top line.

Organic revenues rose 2.5% year over year. The figure excluded revenues from acquisitions within the last twelve months.

Total backlog at the end of the third quarter increased 16.7% to $810 million on a year-over-year basis.

FLIR Systems, Inc. Price, Consensus and EPS Surprise

FLIR Systems, Inc. Price, Consensus and EPS Surprise

FLIR Systems, Inc. price-consensus-eps-surprise-chart | FLIR Systems, Inc. Quote

The company’s total operating expenses increased 16.2% year over year to $155.2 million. Its adjusted operating income came in at $101.6 million, which decreased 4.2% from the year ago quarter.

Segmental Performance

Segment-wise, quarterly revenues in the Industrial segment were down 0.3% to $176.6 million. The downside can be attributed to lower demand for test and measurement products, machine vision cameras, and the continuing gradual transition from handhelds to UAS-based and fixed-mount offerings.

Revenues in the Government and Defense segment totaled $213.3 million, up 24.1% on a year-over-year basis. The upside can be attributed to acquisitions of Aeryon Labs and Endeavor Robotics earlier in the year and solid organic revenue growth of 9.8%.

Moreover, the Commercial segment revenues amounted to $81.3 million, down 5.3% from the year-ago quarter’s figure. The downside was caused by foreign exchange effects as well as lower customer demand in the Maritime business primarily related to macroeconomic conditions.

Liquidity & Cash Flow

As of Sep 30, 2019, the company’s cash and cash equivalents were $295.4 million compared with $512.1 million as of Dec 31, 2018. Long-term debt totaled $644.9 million, up from $421.9 million as of Dec 31, 2018.

Cash flow from operating activities for the nine months ended Sep 30, 2019, amounted to $276.8 million, up 0.4% from $276.8 million as of Sep 30, 2018.

Outlook

FLIR Systems updated its financial guidance for 2019. The company currently expects to generate adjusted earnings per share of $2.30 compared with the earlier guided range of $2.30-$2.36. Currently, the Zacks Consensus Estimate for 2019 earnings, pegged at $2.33, lies above the company provided guidance.

The company currently expects to record revenues of $1.90 billion compared with the prior guidance range of $1.92-$1.95 billion. The Zacks Consensus Estimate for 2019 revenues, pegged at $1.93 billion, lies above the company’s guidance.

The company, however, continues to expect 2019 adjusted operating income margin to be 22-23%.

Zacks Rank

FLIR Systems currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Defense Releases

Lockheed Martin Corp. (LMT - Free Report) reported third-quarter 2019 earnings of $5.66 per share, which surpassed the Zacks Consensus Estimate of $5.03 by 12.5%. The bottom line also improved 10.1% from $5.14 in the year-ago quarter.

Textron Inc. (TXT - Free Report) reported third-quarter 2019 earnings from continuing operations of 95 cents per share, which surpassed the Zacks Consensus Estimate of 85 cents by 11.8%. The bottom line increased 55.7% from the year-ago quarter.

General Dynamics Corp. (GD - Free Report) reported third-quarter 2019 earnings from continuing operations of $3.14 per share, which beat the Zacks Consensus Estimate of $3.06 by 2.6%. The bottom line also improved 10.2% from the prior-year quarter’s $2.85.

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