FLIR Earnings Cheat Sheet: Fifth Straight Quarter of Shrinking Margins as Net Income Falls

Rising costs hurt S&P 500 (NYSE:SPY) component FLIR Systems, Inc. (NASDAQ:FLIR) in the second quarter as profit dropped from a year earlier. FLIR Systems, Inc. designs and manufactures thermal imaging systems used for a variety of applications in commercial, industrial and government markets across the globe.

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FLIR Systems Earnings Cheat Sheet for the Second Quarter

Results: Net income for the aerospace/defense products and services company fell to $29.3 million (18 cents per share) vs. $59.5 million (37 cents per share) a year earlier. This is a decline of 50.7% from the year earlier quarter.

Revenue: Rose 17.8% to $390 million from the year earlier quarter.

Actual vs. Wall St. Expectations: FLIR fell short of the mean analyst estimate of 36 cents per share. It fell short of the average revenue estimate of $410.8 million.

Quoting Management: “The second quarter finished with solid results for our Commercial Systems division, which posted one of its best growth quarters along with substantially improved profitability. Our Government Systems division was impacted by order and shipment delays,” noted Earl Lewis, President and CEO of FLIR. “We are excited to add Aerius to our Commercial Systems business. Aerius will enhance our ability to serve OEMs in numerous sectors as well as augment our multi-spectral systems development capabilities.”

Key Stats:

The company has enjoyed double-digit year-over-year percentage revenue growth for the past five quarters. Over that span, the company has averaged growth of 24.6%, with the biggest boost coming in the fourth quarter of the last fiscal year when revenue rose 39.4% from the year earlier quarter.

Last quarter marked the fifth straight quarter that the company saw shrinking gross margins as gross margin fell 2.9 percentage points to 52.5% from the year earlier quarter. Over that time, margins have contracted on average 3.3 percentage points per quarter on a year-over-year basis.

The company has now seen net income fall in each of the last two quarters. In the first quarter, net income fell 8.2% from the year earlier quarter.

The company has now fallen short of analyst estimates for the last three quarters. It missed the mark by 3 cents in the first quarter and by one cent in the fourth quarter of the last fiscal year.

Competitors to Watch: L-3 Communications Hldgs., Inc. (NYSE:LLL), General Dynamics Corp. (NYSE:GD), Raytheon Company (NYSE:RTN), Irvine Sensors Corporation (IRSN), Elbit Systems Ltd. (NASDAQ:ESLT), Herley Industries, Inc. (NASDAQ:HRLY), Cubic Corporation (NYSE:CUB), Anaren, Inc. (NASDAQ:ANEN), and Tel-Instrument Electronics Corp. (AMEX:TIK).

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(Source: Xignite Financials)