UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE
ACT OF 1934
Date
of Report (Date of earliest event reported): July 25, 2018
FLIR SYSTEMS,
INC.
(Exact
name of registrant as specified in its charter)
OREGON |
0-21918 |
93-0708501 |
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
27700 SW Parkway Avenue
Wilsonville, Oregon 97070
(503)
498-3547
(Address, including zip code, and telephone number,
including
area code, of registrant’s principal executive offices)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
⃞ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
⃞ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
⃞ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
⃞ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ⃞
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ⃞
Item 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On July 25, 2018, FLIR Systems, Inc. (the “Company”) issued a news release announcing (i) its financial results for the quarter and six months ended June 30, 2018, (ii) a revision of expectations of revenue and earnings per share for the year ending December 31, 2018, and (iii) the declaration of a quarterly dividend.
The news release issued July 25, 2018 is furnished herewith as Exhibit
99.1 to this Report and shall not be deemed to be filed for purposes of
Section 18 of the Exchange Act.
Item
9.01. FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits.
SIGNATURE
Pursuant to
the requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized on July 25, 2018.
FLIR SYSTEMS, INC. |
||
(Registrant) | ||
|
By |
/s/ Carol P. Lowe |
Carol P. Lowe |
||
Executive Vice President and Chief Financial Officer |
Exhibit 99.1
FLIR Systems Announces Second Quarter 2018 Financial Results
Second Quarter Revenue Growth of 4% Over Prior Year; Organic Revenue Growth of 11% Over Prior Year
GAAP EPS of $0.51; Adjusted EPS of $0.55, Up 31% Over Prior Year
Operating Margin Improved 430 Basis Points Over Prior Year; Adjusted Operating Margin Improved 390 Basis Points Over Prior Year
Increased 2018 Financial Guidance
WILSONVILLE, Ore.--(BUSINESS WIRE)--July 25, 2018--FLIR Systems, Inc. (NASDAQ: FLIR) today announced financial results for the second quarter ended June 30, 2018. “We are pleased with our second quarter results,” said Jim Cannon, FLIR President and Chief Executive Officer. “Strong organic sales growth and meaningful margin improvement drove adjusted earnings per share growth of 31%. In addition to excellent sales and earnings performance, FLIR significantly improved operating cash flow for the first half of 2018, up 46% over the same period of 2017.”
Mr. Cannon continued, “Our team embraced a number of new business initiatives while maintaining focus on the customer to drive solid first half results. We’re taking this momentum into the second half of the year as we continue executing our mission of innovating technologies that increase awareness and insight so professionals can make more informed decisions that save lives and livelihoods.”
Second Quarter 2018
Second quarter 2018 revenue was $452.7 million, up 4% over second quarter 2017 revenue of $434.1 million. Organic revenue growth was 11%, which excludes the second quarter results in 2017 of the previously disclosed divested security businesses that closed in the first quarter of 2018.
GAAP Earnings Results
GAAP gross profit in the second quarter increased 12% to $232.6 million, or 51.4% of revenue, compared to $206.7 million, or 47.6% of revenue in the second quarter of 2017. GAAP operating income in the second quarter increased 33% to $88.7 million, compared to $66.6 million in the prior year, representing a 430 basis point improvement in operating margin.
Second quarter 2018 GAAP net earnings were $71.6 million, or $0.51 per diluted share, compared with GAAP net earnings of $51.4 million, or $0.37 per diluted share in the second quarter last year.
Cash provided by operations was $153.3 million in the first half of 2018, compared to $105.3 million in the first half of the prior year, a 46% increase. Approximately 2.0 million shares were repurchased in the first half of 2018 at an average price of $50.52.
Non-GAAP Earnings Results
Adjusted gross profit was $236.4 million in the second quarter, representing 52.2% of revenue and increasing 11% over adjusted gross profit of $212.4 million in the second quarter of 2017. Adjusted operating income was $102.0 million in the second quarter, which was 26% higher than adjusted operating income of $81.0 million in the second quarter of 2017. Adjusted operating margin increased 390 basis points to 22.5%, compared with 18.7% in the second quarter of 2017.
Adjusted net earnings in the second quarter were $77.4 million, or $0.55 per diluted share, which was 31% higher than adjusted earnings per diluted share of $0.42 in the second quarter of 2017.
Business Unit Results
Revenue from the Industrial Business Unit was $188.4 million, an increase of 14% over the second quarter results of last year, with strength in optical gas imaging, automotive, and industrial unmanned aerial systems (UAS). The Government and Defense Business Unit contributed $161.0 million of revenue during the second quarter, up 11% over the prior year, driven by increased deliveries of gimbaled systems, DR-SKO, and UAS systems. The Commercial Business Unit recorded revenue of $103.3 million in the second quarter, down 17% from the prior year, but up 5% excluding revenue related to the divested security businesses. Strong results in the maritime, thermal rifle scopes, and intelligent transportation systems product lines contributed to the organic revenue growth.
Revenue and Earnings Outlook for 2018
Based on financial results for the second quarter and the outlook for the remainder of the year, FLIR now expects revenue in 2018 to be in the range of $1.780 billion to $1.800 billion, increased from the previous $1.760 billion to $1.790 billion amount provided in the first quarter earnings call. Adjusted net earnings per diluted share is now expected to be in the range of $2.17 to $2.22 per diluted share, up from the previous outlook of $2.11 to $2.16 per diluted share.
Dividend Declaration
FLIR’s Board of Directors has declared a quarterly cash dividend of $0.16 per share on FLIR common stock, payable September 7, 2018 to shareholders of record as of close of business on August 24, 2018.
Conference Call
FLIR has scheduled a conference call at 9:00 a.m. ET (6:00 a.m. PT) today to discuss its results for the quarter. A simultaneous webcast of the conference call and the accompanying summary presentation can be accessed online from a link in the Events & Presentations section of www.flir.com/investor. A replay will be available after 12:00 p.m. ET (9:00 a.m. PT) at this same internet address. Summary second quarter and historical financial data may be accessed online from the Financial Info Database link under the Financials & Filings section at www.flir.com/investor.
About FLIR Systems
Founded in 1978 and headquartered in Wilsonville, Oregon, FLIR Systems is a world-leading maker of sensor systems that enhance perception and heighten awareness, helping to save lives, improve productivity, and protect the environment. Through its nearly 3,500 employees, FLIR’s vision is to be “The World’s Sixth Sense” by leveraging thermal imaging and adjacent technologies to provide innovative, intelligent solutions for security and surveillance, environmental and condition monitoring, outdoor recreation, machine vision, navigation, and advanced threat detection. For more information, please visit www.flir.com and follow @flir.
Definitions and Financial Measures
Organic revenue growth is defined as total revenue growth less the sales of companies acquired and divested in the past twelve months. Operating margin is defined as operating income as a percentage of revenue. Management uses operating income and operating margin as key measures to assess the performance of the Company as a whole, as well as the related measures at the segment level.
Non-GAAP Financial Measures: In addition to financial measures prepared in accordance with generally accepted accounting principles (GAAP), this earnings release makes reference to non-GAAP measures. With respect to the outlook for the full year 2018, certain items that affect GAAP net earnings per diluted share are out of the Company’s control and/or cannot be reasonably predicted. Consequently, the Company is unable to provide a reasonable estimate of GAAP net earnings per diluted share or a corresponding reconciliation to GAAP net earnings per diluted share for the full year. Additional information regarding the reasons the Company uses non-GAAP measures, a reconciliation of these measures to the most directly comparable GAAP measures, and other information relating to these measures are included below, following the GAAP financial information.
Forward-Looking Statements
Statements in this release by Jim Cannon and the statements in the section captioned “Revenue and Earnings Outlook for 2018” above are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements that are not statements of historical fact (including statements containing the words “believes,” “plans,” “anticipates,” “expects,” “estimates,” or similar expressions) should be considered to be forward-looking statements. Such statements are based on current expectations, estimates, and projections about FLIR’s business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors, including the following: changes in demand for FLIR’s products, product mix, the timing of customer orders and deliveries, the impact of competitive products and pricing, the impact of self-imposed or government mandated remediation efforts related to FLIR’s compliance with U.S. export control laws and regulations and similar laws and regulations, the timely receipt of any necessary export licenses, constraints on supplies of critical components, excess or shortage of production capacity, the ability to manufacture and ship the products in the time period required, actual purchases under agreements, the continuing eligibility of FLIR to act as a federal contractor, the amount and availability of appropriated government procurement funds and other risks discussed from time to time in filings and reports filed with the Securities and Exchange Commission. In addition, such statements could be affected by general industry and market conditions and growth rates, and general domestic and international economic conditions. Such forward-looking statements speak only as of the date on which they are made and FLIR does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this release, or for changes made to this document by wire services or internet service providers.
FLIR SYSTEMS, INC. | |||||||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||||||
(In thousands, except per share amounts)(Unaudited) | |||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||
Revenue | $ | 452,707 | $ | 434,124 | $ | 892,325 | $ | 840,938 | |||||||||||
Cost of goods sold | 220,156 | 227,392 | 441,860 | 442,885 | |||||||||||||||
Gross profit | 232,551 | 206,732 | 450,465 | 398,053 | |||||||||||||||
Operating expenses: | |||||||||||||||||||
Research and development | 46,429 | 43,046 | 90,990 | 85,029 | |||||||||||||||
Selling, general and administrative | 97,456 | 97,056 | 205,139 | 187,308 | |||||||||||||||
Loss on sale of business | - | - | 10,178 | - | |||||||||||||||
Total operating expenses | 143,885 | 140,102 | 306,307 | 272,337 | |||||||||||||||
Earnings from operations | 88,666 | 66,630 | 144,158 | 125,716 | |||||||||||||||
Interest expense | 3,992 | 4,472 | 8,044 | 8,925 | |||||||||||||||
Interest income | (656 | ) | (355 | ) | (1,612 | ) | (626 | ) | |||||||||||
Other expense (income), net | 2,377 | (1,027 | ) | 158 | (1,687 | ) | |||||||||||||
Earnings before income taxes | 82,953 | 63,540 | 137,568 | 119,104 | |||||||||||||||
Income tax provision | 11,390 | 12,127 | 26,810 | 25,120 | |||||||||||||||
Net earnings | $ | 71,563 | $ | 51,413 | $ | 110,758 | $ | 93,984 | |||||||||||
Earnings per share: | |||||||||||||||||||
Basic | $ | 0.52 | $ | 0.38 | $ | 0.80 | $ | 0.69 | |||||||||||
Diluted | $ | 0.51 | $ | 0.37 | $ | 0.79 | $ | 0.68 | |||||||||||
Weighted average shares outstanding: | |||||||||||||||||||
Basic | 137,749 | 136,865 | 138,124 | 136,613 | |||||||||||||||
Diluted | 140,149 | 138,449 | 140,564 | 138,266 | |||||||||||||||
FLIR SYSTEMS, INC. | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(In thousands)(Unaudited) | |||||||
June 30, | December 31, | ||||||
2018 | 2017 | ||||||
ASSETS |
|||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 507,942 | $ | 519,090 | |||
Accounts receivable, net | 304,265 | 346,687 | |||||
Inventories | 384,242 | 372,183 | |||||
Assets held for sale, net | - | 67,344 | |||||
Prepaid expenses and other current assets | 89,385 | 81,915 | |||||
Total current assets | 1,285,834 | 1,387,219 | |||||
Property and equipment, net | 252,478 | 263,996 | |||||
Deferred income taxes, net | 22,574 | 21,001 | |||||
Goodwill | 903,849 | 909,811 | |||||
Intangible assets, net | 154,958 | 168,130 | |||||
Other assets | 85,382 | 59,869 | |||||
$ | 2,705,075 | $ | 2,810,026 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|||||||
Current liabilities: | |||||||
Accounts payable | $ | 106,721 | $ | 106,389 | |||
Deferred revenue | 27,299 | 25,614 | |||||
Accrued payroll and related liabilities | 66,849 | 71,310 | |||||
Accrued expenses | 36,501 | 37,089 | |||||
Accrued income taxes | 32,066 | 64,136 | |||||
Liabilities held for sale | - | 39,544 | |||||
Other current liabilities | 46,654 | 50,851 | |||||
Total current liabilities | 316,090 | 394,933 | |||||
Long-term debt | 421,316 | 420,684 | |||||
Deferred income taxes | 15,294 | 12,496 | |||||
Accrued income taxes | 90,185 | 87,483 | |||||
Other long-term liabilities | 67,024 | 59,872 | |||||
Commitments and contingencies | |||||||
Shareholders’ equity | 1,795,166 | 1,834,558 | |||||
$ | 2,705,075 | $ | 2,810,026 | ||||
FLIR SYSTEMS, INC. | |||||||||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||||||
(In thousands)(Unaudited) | |||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||
Cash flows from operating activities: | |||||||||||||||||||
Net earnings | $ | 71,563 | $ | 51,413 | $ | 110,758 | $ | 93,984 | |||||||||||
Income items not affecting cash: | |||||||||||||||||||
Depreciation and amortization | 16,609 | 17,977 | 33,055 | 35,008 | |||||||||||||||
Deferred income taxes | (1,385 | ) | (342 | ) | 3,189 | (150 | ) | ||||||||||||
Stock-based compensation arrangements | 8,469 | 8,608 | 14,400 | 14,854 | |||||||||||||||
Change in accrued income taxes | (3,643 | ) | (14,527 | ) | (33,078 | ) | (18,642 | ) | |||||||||||
Other activity impacting operating cash flows | 18,555 | (33,002 | ) | 25,020 | (19,800 | ) | |||||||||||||
Cash provided by operating activities | 110,168 | 30,127 | 153,344 | 105,254 | |||||||||||||||
Cash flows from investing activities: | |||||||||||||||||||
Additions to property and equipment, net | (6,336 | ) | (10,032 | ) | (13,435 | ) | (23,627 | ) | |||||||||||
Proceeds from sale of business | - | - | 25,920 | - | |||||||||||||||
Business acquisitions, net of cash acquired | (7,125 | ) | - | (14,195 | ) | - | |||||||||||||
Other investments | - | 2,859 | (9,500 | ) | 2,859 | ||||||||||||||
Cash used by investing activities | (13,461 | ) | (7,173 | ) | (11,210 | ) | (20,768 | ) | |||||||||||
Cash flows from financing activities: | |||||||||||||||||||
Repayments of credit agreement and long-term debt | - | (3,750 | ) | - | (11,250 | ) | |||||||||||||
Repurchase of common stock | (5,001 | ) | - | (99,957 | ) | - | |||||||||||||
Dividends paid | (22,098 | ) | (20,557 | ) | (44,330 | ) | (41,013 | ) | |||||||||||
Proceeds from shares issued pursuant to stock-based compensation plans |
13,393 | 6,033 | 16,890 | 7,035 | |||||||||||||||
Tax paid for net share exercises and issuance of vested restricted stock units |
(11,848 | ) | (7,179 | ) | (12,113 | ) | (9,022 | ) | |||||||||||
Other financing activities | - | (4 | ) | (11 | ) | (4 | ) | ||||||||||||
Cash used by financing activities | (25,554 | ) | (25,457 | ) | (139,521 | ) | (54,254 | ) | |||||||||||
Effect of exchange rate changes on cash | (15,349 | ) | 8,658 | (13,761 | ) | 12,010 | |||||||||||||
Net increase (decrease) in cash and cash equivalents | 55,804 | 6,155 | (11,148 | ) | 42,242 | ||||||||||||||
Cash and cash equivalents: | |||||||||||||||||||
Beginning of period | 452,138 | 397,436 | 519,090 | 361,349 | |||||||||||||||
End of period | $ | 507,942 | $ | 403,591 | $ | 507,942 | $ | 403,591 | |||||||||||
FLIR SYSTEMS, INC. | |||||||||||||||||||
OPERATING SEGMENT PERFORMANCE | |||||||||||||||||||
(In thousands)(Unaudited) | |||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||
SEGMENT REVENUE |
|||||||||||||||||||
Industrial | $ | 188,421 | $ | 164,736 | $ | 359,079 | $ | 319,521 | |||||||||||
Government and Defense | 161,027 | 145,715 | 320,358 | 283,896 | |||||||||||||||
Commercial | 103,259 | 123,673 | 212,888 | 237,521 | |||||||||||||||
SEGMENT EARNINGS FROM OPERATIONS |
|||||||||||||||||||
Industrial | $ | 58,096 | $ | 47,047 | $ | 103,550 | $ | 89,865 | |||||||||||
Government and Defense | 45,548 | 38,153 | 91,730 | 71,473 | |||||||||||||||
Commercial | 17,367 | 15,475 | 31,839 | 25,463 | |||||||||||||||
SEGMENT OPERATING MARGIN |
|||||||||||||||||||
Industrial | 30.8 | % | 28.6 | % | 28.8 | % | 28.1 | % | |||||||||||
Government and Defense | 28.3 | % | 26.2 | % | 28.6 | % | 25.2 | % | |||||||||||
Commercial | 16.8 | % | 12.5 | % | 15.0 | % | 10.7 | % | |||||||||||
FLIR SYSTEMS, INC. | |||||||||||||||||||
GAAP TO NON-GAAP RECONCILIATION | |||||||||||||||||||
(In thousands, except per share amounts)(Unaudited) | |||||||||||||||||||
Three Months Ended |
Six Months Ended | ||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||
Gross profit: | |||||||||||||||||||
GAAP gross profit | $ | 232,551 | $ | 206,732 | $ | 450,465 | $ | 398,053 | |||||||||||
Amortization of acquired intangible assets | 3,817 | 3,644 | 7,536 | 7,202 | |||||||||||||||
Purchase accounting adjustments | - | - | - | 1,992 | |||||||||||||||
Other | 34 | 2,000 | 382 | 2,000 | |||||||||||||||
Adjusted gross profit | $ | 236,402 | $ | 212,376 | $ | 458,383 | $ | 409,247 | |||||||||||
Gross margin: | |||||||||||||||||||
GAAP gross margin | 51.4 | % | 47.6 | % | 50.5 | % | 47.3 | % | |||||||||||
Cumulative effect of non-GAAP Adjustments | 0.9 | % | 1.3 | % | 0.9 | % | 1.3 | % | |||||||||||
Adjusted gross margin | 52.2 | % | 48.9 | % | 51.4 | % | 48.7 | % | |||||||||||
Earnings from operations: | |||||||||||||||||||
GAAP earnings from operations | $ | 88,666 | $ | 66,630 | $ | 144,158 | $ | 125,716 | |||||||||||
Amortization of acquired intangible assets | 6,099 | 7,016 | 12,086 | 13,751 | |||||||||||||||
Purchase accounting adjustments | - | - | - | 1,992 | |||||||||||||||
Restructuring charges | 2,140 | 13 | 1,297 | 101 | |||||||||||||||
Acquisition related expenses | 2,110 | 379 | 2,847 | 1,338 | |||||||||||||||
Loss on sale of business | - | - | 10,178 | - | |||||||||||||||
Executive transition costs | 1,330 | 4,961 | 2,208 | 5,731 | |||||||||||||||
DDTC estimated penalty | - | - | 15,000 | - | |||||||||||||||
Other | 1,618 | 2,000 | 1,965 | 2,000 | |||||||||||||||
Adjusted earnings from operations | $ | 101,963 | $ | 80,999 | $ | 189,739 | $ | 150,629 | |||||||||||
Operating margin: | |||||||||||||||||||
GAAP operating margin | 19.6 | % | 15.3 | % | 16.2 | % | 14.9 | % | |||||||||||
Cumulative effect of non-GAAP Adjustments | 2.9 | % | 3.3 | % | 5.1 | % | 3.0 | % | |||||||||||
Adjusted operating margin | 22.5 | % | 18.7 | % | 21.3 | % | 17.9 | % | |||||||||||
Net earnings: | |||||||||||||||||||
GAAP net earnings | $ | 71,563 | $ | 51,413 | $ | 110,758 | $ | 93,984 | |||||||||||
Amortization of acquired intangible assets | 6,099 | 7,016 | 12,086 | 13,751 | |||||||||||||||
Purchase accounting adjustments | - | - | - | 1,992 | |||||||||||||||
Restructuring charges | 2,140 | 13 | 1,297 | 101 | |||||||||||||||
Acquisition related expenses | 2,110 | 379 | 2,847 | 1,338 | |||||||||||||||
Loss on sale of business | - | - | 10,178 | - | |||||||||||||||
Executive transition costs | 1,406 | 4,961 | 2,284 | 5,731 | |||||||||||||||
DDTC estimated penalty | - | - | 15,000 | - | |||||||||||||||
Other | 1,618 | 2,000 | 1,965 | 2,000 | |||||||||||||||
Estimated tax benefit of non-GAAP adjustments | (2,418 | ) | (3,592 | ) | (9,360 | ) | (6,228 | ) | |||||||||||
Discrete tax items, net | (5,069 | ) | (3,758 | ) | (1,391 | ) | (4,656 | ) | |||||||||||
Adjusted net earnings | $ | 77,449 | $ | 58,432 | $ | 145,664 | $ | 108,013 | |||||||||||
Earnings Per Diluted Share: | |||||||||||||||||||
GAAP earnings per diluted share | $ | 0.51 | $ | 0.37 | $ | 0.79 | $ | 0.68 | |||||||||||
Cumulative effect of non-GAAP Adjustments | 0.04 | 0.05 | 0.25 | 0.10 | |||||||||||||||
Adjusted earnings per diluted share | $ | 0.55 | $ | 0.42 | $ | 1.04 | $ | 0.78 | |||||||||||
Weighted average diluted shares outstanding: | 140,149 | 138,449 | 140,564 | 138,266 | |||||||||||||||
Explanation of Non-GAAP Financial Measures
We report our financial results in accordance with United States generally accepted accounting principles (GAAP). As a supplement to our GAAP financial results, this earnings announcement contains some or all of the following non-GAAP financial measures: (i) adjusted gross profit, (ii) adjusted gross margin (defined as adjusted gross profit divided by revenue), (iii) adjusted operating earnings/income, (iv) adjusted operating margin (defined as adjusted operating income divided by revenue), (v) adjusted net earnings/income, and (vi) adjusted earnings per diluted share (EPS). These non-GAAP measures of financial performance are not prepared in accordance with GAAP and computational methods may differ from those used by other companies. Additionally, these non-GAAP measures should not be considered a substitute for any other performance measure determined in accordance with GAAP and the Company cautions investors and potential investors to consider these measures in addition to, not as a substitute for, its consolidated financial results as presented in accordance with GAAP. Each of the non-GAAP measures is adjusted from GAAP results and are outlined in the "GAAP to Non-GAAP Reconciliation" tables included within this earnings release.
In calculating non-GAAP financial measures, we exclude certain items (including gains and losses) to facilitate a review of the comparability of our core operating performance on a period-to-period basis. The excluded items represent amortization of acquired intangible assets, purchase accounting adjustments, restructuring charges, acquisition related expenses, loss on sale of business, executive transition costs, discrete tax items, and other items we do not consider to be directly related to our core operating performance. We use non-GAAP measures internally to evaluate the core operating performance of our business, for comparison with forecasts and strategic plans, for calculating return on investment, and as a factor for determining incentive compensation for certain employees. Accordingly, supplementing GAAP financial results with these non-GAAP financial measures enables the comparison of our ongoing operating results in a manner consistent with the metrics reviewed by management. We believe that these non-GAAP measures, when read in conjunction with our GAAP financials, provide useful information to investors by facilitating:
The following are explanations of each type of adjustment that we incorporate into non-GAAP financial measures:
CONTACT:
FLIR Systems, Inc.
Jay Gentzkow, 503-498-3809
jay.gentzkow@flir.com