Announces preliminary third quarter revenue and EPS.
FLIR Systems, Inc. (NASDAQ: FLIR) announced that it is realigning multiple production and engineering organizations and streamlining its global operations in order to better position FLIR® to develop, produce and market products more quickly and cost-effectively. The realignment includes closing up to six not-to-scale sites in the United States and Europe and a proposed transfer of those operations to larger FLIR facilities. FLIR also intends to consolidate its optics and laser manufacturing businesses to better realize the benefits of vertical integration in these areas.
Management expects savings from these actions to exceed $20 million per year when fully implemented. FLIR expects to record a pre-tax restructuring charge of approximately $27 million to $30 million in the fourth quarter related to these and additional cost reduction measures.
"The realignment of operations announced the culmination of a strategic operations review we began this past summer to further enhance operating efficiency and profitability and to improve our internal execution with better communication, collaboration, and cooperation across the company," said Andy Teich, President and CEO of FLIR.
Preliminary Third Quarter Results
FLIR also announced preliminary revenue and earnings per share results for the third quarter of fiscal year. Third quarter preliminary results were negatively impacted by weakness in markets that have exposure to the U.S. federal government. Extended procurement and export licensing processes at federal government agencies caused shipments to be lower than anticipated in FLIR's Surveillance segment and the cores and components line of business within the Thermal Vision and Measurement segment. As a result, FLIR now expects to report revenues of approximately $358 million to $360 million and earnings per diluted share of approximately $0.32 to $0.33 for the three months ended. Margins in these businesses were negatively impacted by product mix and factory absorption due to lower-than-anticipated unit volumes.
The preliminary information provided above is based on FLIR's current estimate of results from operations for the third quarter and remains subject to change based on the ongoing review of results.
Given the influences on the third quarter described above, and anticipated impacts on the fourth quarter, management now expects revenue to be in the range of $1.45 billion to $1.5 billion and net income excluding the restructuring charges discussed above to be in the range of $1.38 to $1.43 per diluted share. These estimates compare with management's prior outlook of revenue of $1.5 billion to $1.6 billion and net income of $1.56 to $1.66 per diluted share.
"While we are disappointed in the preliminary results for the third quarter, we have also taken steps, above and beyond those related to our strategic review, to reduce costs in response to the current operating environment, and we remain highly confident in our strategy and outlook for the future," said Teich. "Ongoing uncertainty in the U.S. government is likely to continue to affect our performance in the fourth quarter, and our revised guidance is intended to reflect this environment. We believe our CDMQ® strategy is the best alternative for government customers to acquire high performance intelligence, surveillance, reconnaissance, targeting, and detection capabilities with low cost, high quality, and outstanding value. We remain very enthusiastic about the opportunities in our commercial business and beyond, and are committed to continuing to innovate for our customers and deliver value to our shareholders, as illustrated by our recent new product introductions and strategic business realignment."
Third Quarter Results Conference Call October 24
FLIR will release full financial results for the third quarter of 2013 at approximately 7:30 a.m. ET (4:30 a.m. PT) on Thursday, October 24, 2013. Summary third quarter financial data, including segment details, can be accessed online soon after the release of the third quarter results from the Financial Info Database link at www.FLIR.com/investor.
FLIR has scheduled a conference call at 8:00 a.m. ET (5:00 a.m. PT) that morning to discuss its results for the quarter. A simultaneous webcast of the conference call may be accessed online from the Events & Presentations section at www.FLIR.com/investor. A replay will be available after 11:00 a.m. ET (8:00 a.m. PT) at this same internet address.
About FLIR Systems
FLIR Systems, Inc. is a world leader in the design, manufacture, and marketing of sensor systems that enhance perception and awareness. FLIR's advanced thermal imaging and threat detection systems are used for a wide variety of imaging, thermography, and security applications, including airborne and ground-based surveillance, condition monitoring, research and development, manufacturing process control, search and rescue, drug interdiction, navigation, transportation safety, border and maritime patrol, environmental monitoring, and chemical, biological, radiological, nuclear, and explosives (CBRNE) detection. Visit FLIR's web site at www.FLIR.com.