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FLIR Systems (FLIR) Beats on Q4 Earnings, Issues 2018 View

Zacks

FLIR Systems Inc.’s FLIR fourth-quarter 2017 adjusted earnings per share came in at 58 cents, surpassing the Zacks Consensus Estimate of 56 cents. The reported figure increased 11.5% from the prior-year quarter figure on the back of solid top-line growth.

Adjusted net income in the quarter came in at $81.8 million compared with $71.9 million in the year-ago quarter. The year-over-year improvement can primarily be attributed to the company’s impressive top-line performance.

FLIR Systems, Inc. Price, Consensus and EPS Surprise

FLIR Systems, Inc. Price, Consensus and EPS Surprise | FLIR Systems, Inc. Quote


For full-year 2017, net earnings increased 12.3% to $262.6 million.

Inside the Headlines

FLIR Systems' top line grew 4.2% year over year to $494.8 million. However, the figure missed the Zacks Consensus Estimate of $501 million. Solid growth in four of the company’s segments led to the year-over-year improvement, which more than offset the sales decline in the Surveillance and Security segment.

For full-year 2017, revenues rose 8.3% over the prior year to a record level of $1.8 billion.

As for the segments, OEM & Emerging Markets revenues were up an impressive 15.2% over the prior-year quarter to $87.7 million while Maritime revenues recorded growth of 14.5% year over year to $43.8 million. However, revenues at the Surveillance segment were down 4.7% year over year to $151 million. Also, the same from the Security segment declined 2.9% from the prior-year quarter to $71 million.

In addition, Instruments revenues recorded growth of 6.9% year over year to $102.6 million. Revenues from the Detection segment also increased 18.3% year over year to $38.7 million.

FLIR Systems' backlog of firm orders for delivery within the next 12 months came in at $652 million, reflecting an increase of 10% from the tally at the end of year-ago quarter.

Adjusted operating income came in at $111.7 million compared with $103.2 million in the prior-year quarter.

Liquidity & Cash Flow

As of Dec 31, 2017, the company's cash and cash equivalents were $519.1 million compared with $361.3 million a year ago. Long-term debt decreased to $420.7 million compared with $501.9 million as at Dec 31, 2016.
Cash flow generated from operating activities in the quarter came in at $98.9 million, higher than $97.1 million in the year-earlier quarter.

Dividend

Concurrent with the earnings report, FLIR Systems approved a quarterly cash dividend of 16 cents per share reflecting an increase of 7% over the previous quarterly dividend of 15 cents per share. The dividend is payable on Mar 9, 2018, to shareholders of record as on Feb 23.

Guidance

FLIR Systems provided its guidance for 2018. It expects adjusted earnings to lie in the range of $2.05-$2.10 per share on revenues of $1.73-$1.76 billion. The figures represent year-over-year growth of about 9-12% in adjusted earnings and 4-6% increase in revenues.

Existing Business Scenario

FLIR Systems continues to benefit from its well-diversified business portfolio in terms of geographies, products and markets. Additionally, restructuring activities undertaken by the company since 2013 have helped it reap synergies and drive profitable growth combating headwinds like currency fluctuations and tough market conditions. We anticipate this trend to continue in the upcoming quarters as well.

However, poor economic conditions across the company’s key operating regions might hamper capital investment and consumer spending, thus weighing on the company’s profitability.

FLIR Systems carries a Zacks Rank #3 (Hold).

Stocks to Consider

A few better-ranked stocks in the same space are Huntington Ingalls Industries, Inc. HII, AeroVironment, Inc. AVAV and Raytheon Company RTN. While Huntington Ingalls Industries sports a Zacks Rank #1 (Strong Buy), AeroVironment and Raytheon Company carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Huntington Ingalls Industries has a decent earnings surprise history, surpassing estimates thrice in the trailing four quarters, with an average beat of 14.2%.

AeroVironment boasts an excellent earnings surprise history, exceeding estimates in the trailing four quarters, with an average beat of 165.8%.

Raytheon Company has delivered an earnings beat in the trailing four quarters, with an average positive surprise of 6.4%.

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