FLIR Systems, Inc. Net Income surged on 163% while Revenue decreased slightly on 1.4%
02/13/2019 • About FLIR Systems, Inc. (
$FLIR) • By InTwits
FLIR Systems, Inc. reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- FLIR Systems, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.9%. At the same time it's in pair with industry average of 3.6%
- CAPEX is quite volatile: $31m in 2018, $42m in 2017, $36m in 2016, $68m in 2015, $61m in 2014
- In the last 5 years the company invested considerably less than D&A: $238m vs. $302m. In 2018 this situation was still the same: CAPEX was 31 while D&A was 66
- The company has highly profitable business model: ROIC is 14.0%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue decreased slightly on 1.4%. Revenue decline showed acceleration in 18Q4 - it was 9.4% YoY. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased slightly on 1.6 pp from 20.0% to 21.7% in 2018.
Gross Margin increased on 3.0 pp from 47.7% to 50.7% in 2018. During the last 5 years Gross Margin bottomed in 2016 at 46.2% and was growing since that time. SG&A as a % of Revenue increased slightly on 1.0 pp from 20.8% to 21.8% in 2018. During 2014-2018 SG&A as a % of Revenue bottomed in 2016 at 19.4% and was growing since that time. Stock Based Compensation (SBC) as a % of Revenue showed almost no change in 2018. During the last 5 years SBC as a % of Revenue bottomed in 2015 at 1.7% and was growing since that time.
Net Income margin increased on 9.9 pp from 6.0% to 15.9% in 2018. The efficient tax rate was 8.0% in 2018 while the average for the last five years was 29.6%.
Investments (CAPEX, working capital and M&A)
FLIR Systems, Inc.'s CAPEX/Revenue was 1.7% in 2018. FLIR Systems, Inc. showed decline in CAPEX/Revenue of 2.6 pp from 4.4% in 2015 to 1.7% in 2018. For the last three years the average CAPEX/Revenue was 2.1%. CAPEX as a % of Revenue stuck to a declining trend at -0.66 pp per annum in the last 5 years.
Accounts receivable as a % of Revenue decreased slightly on 1.0 pp from 19.3% to 18.2% in 2018. Inventories as a % of Revenue decreased slightly on 0.84 pp from 20.7% to 19.8% in 2018. Accounts payable as a % of Revenue showed almost no change in 2018.
FLIR Systems, Inc. has spent
$27m on M&A in 2018 which accounts for 1.5% of revenue.
Return on investment
The company operates at good ROIC (14.0%) and ROE (15.2%). ROIC increased slightly on 1.2 pp from 12.8% to 14.0% in 2018. ROE increased on 9.1 pp from 6.1% to 15.2% in 2018.
Leverage (Debt)
Company's Net Debt / EBITDA is -0.2x and Debt / EBITDA is 1.1x. Debt showed almost no change in 2018 while cash decreased slightly on 1.3%.
FLIR Systems, Inc. has good short term financial stability: Interest coverage ratio (ICR) is 19.7x. The company has no short term refinancing risk: short term debt is zero.
Average interest expence charged on company's debt was 3.8% in 2018.
Valuation and dividends
The company's trades at EV/EBITDA 18.7x and P/E 25.8x.
The company paid 31.2% of Net Income as dividends in 2018. Dividends grew on average at 9.1% per annum in the last 5 years).
Management team
The company's CEO James J Cannon "Jim" is a founder and has spent 1 year with the company. CEO total compensation was
$7,959,846 in 2018 which included
$850,000 salary. The company's CFO is Carol P Lowe. Carol P Lowe has 1 year tenure at the company.
1.0% of the company is owned by insiders. Insider ownership didn't change in 2018.
The company has 3,649 employees. The number of employees increased on 3.0%. Average revenue per employee in 2018 was
$486,623 and it decreased on 4.3%.
Financial and operational results
FY ended 12/31/2018
FLIR Systems, Inc. ($FLIR) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 1,531 | 1,557 | 1,662 | 1,800 | 1,776 | -1.4% |
| Gross Profit | 750 | 754 | 767 | 859 | 900 | 4.8% |
| SG&A | 332 | 314 | 322 | 374 | 387 | 3.5% |
| EBITDA | 316 | 355 | 353 | 361 | 385 | 6.7% |
| EBIT | 259 | 306 | 296 | 290 | 319 | 9.9% |
| Interest expence | 15 | 14 | 18 | 17 | 16 | -3.9% |
| Tax | 49 | 64 | 109 | 172 | 25 | -85.6% |
| Net Income | 200 | 242 | 167 | 107 | 282 | 163.4% |
| Stock Based Compensation | 31 | 26 | 28 | 31 | 34 | 10.2% |
Balance Sheet
|
|---|
| Cash | 531 | 473 | 361 | 519 | 512 | -1.3% |
| Accounts Receivable | 355 | 326 | 352 | 347 | 324 | -6.6% |
| Inventory | 321 | 393 | 371 | 372 | 352 | -5.4% |
| Accounts Payable | 98 | 140 | 114 | 106 | 95 | -10.2% |
| Short Term Debt | 15 | 265 | 15 | 0 | 0 | |
| Long Term Debt | 358 | 94 | 502 | 421 | 422 | 0.3% |
Cash flow
|
|---|
| Capex | 61 | 68 | 36 | 42 | 31 | -26.9% |
| Dividends | 57 | 61 | 66 | 83 | 88 | 6.0% |
| Acquisitions | | 92 | 419 | | 27 | |
Ratios
|
|---|
| Revenue growth | 2.3% | 1.7% | 6.7% | 8.3% | -1.4% | |
| EBITDA growth | 4.3% | 12.3% | -0.6% | 2.2% | 6.7% | |
|
|---|
| Gross Margin | 49.0% | 48.4% | 46.2% | 47.7% | 50.7% | 3.0% |
| EBITDA Margin | 20.7% | 22.8% | 21.3% | 20.0% | 21.7% | 1.6% |
| EBIT Margin | 16.9% | 19.6% | 17.8% | 16.1% | 17.9% | 1.8% |
| SG&A, % of revenue | 21.7% | 20.1% | 19.4% | 20.8% | 21.8% | 1.0% |
| SBC, % of revenue | 2.0% | 1.7% | 1.7% | 1.7% | 1.9% | 0.2% |
| Net Income Margin | 13.1% | 15.5% | 10.0% | 6.0% | 15.9% | 9.9% |
| CAPEX, % of revenue | 4.0% | 4.4% | 2.2% | 2.3% | 1.7% | -0.6% |
|
|---|
| ROIC | 13.1% | 15.6% | 14.2% | 12.8% | 14.0% | 1.2% |
| ROE | 12.4% | 14.8% | 10.0% | 6.1% | 15.2% | 9.1% |
| Net Debt/EBITDA | -0.5x | -0.3x | 0.4x | -0.3x | -0.2x | 0.0x |
| Interest expence / Average debt | 3.9% | 3.9% | 4.1% | 3.6% | 3.8% | 0.2% |
People
|
|---|
| Insider ownership | 1.0% | 1.0% | 1.0% | 1.0% | 1.0% | 0.0% |
| Employees | 2,741 | 3,003 | 3,436 | 3,542 | 3,649 | 3.0% |
| Revenue/Employee, th. $ | 558 | 519 | 484 | 508 | 487 | -4.3% |
FLIR Systems, Inc. ($FLIR) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 440 | 453 | 435 | 448 | | 8.1% | 4.3% | -6.4% | -9.4% |
| EBITDA | 72 | 105 | 105 | 103 | | -5.5% | 24.4% | -0.6% | 8.7% |
| Net Income | 39 | 72 | 73 | 99 | | -7.9% | 39.2% | 15.1% | |
Balance Sheet
|
|---|
| Cash | 452 | 508 | 593 | 512 | | 13.8% | 25.9% | 35.8% | -1.3% |
| Short Term Debt | 0 | 0 | 0 | 0 | | -100.0% | -100.0% | | |
| Long Term Debt | 421 | 421 | 422 | 422 | | -14.9% | -14.2% | 0.3% | 0.3% |
Ratios
|
|---|
| Gross Margin | 49.6% | 51.4% | 51.1% | 50.8% | | 2.5% | 3.7% | 3.1% | 2.7% |
| EBITDA Margin | 16.4% | 23.3% | 24.1% | 23.0% | | -2.3% | 3.8% | 1.4% | 3.8% |
| Net Income Margin | 8.9% | 15.8% | 16.8% | 22.0% | | -1.5% | 4.0% | 3.1% | 32.1% |
Peers in Electronic Equipment & Instrum
Below you can find FLIR Systems, Inc. benchmarking vs. other companies in Electronic Equipment & Instrum industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Hickok Inc ($HICKA) | | -7.2% | 13.5% | 258.4% | 178.7% |
| Electro Scientific Industries, Inc. ($ESIO) | | -12.2% | 15.9% | -12.7% | 128.5% |
| Microvision, Inc. ($MVIS) | | 163.6% | 60.7% | -34.7% | 82.8% |
| Ipsidy Inc ($IDTY) | | | | | 66.2% |
| Magal Security Systems Ltd. ($MAGS) | | -17.8% | 6.4% | -5.2% | 44.0% |
| |
|---|
| Median (61 companies) | -78.5% | 4.5% | 0.3% | 3.6% | 10.4% |
|---|
| FLIR Systems, Inc. ($FLIR) | | 1.7% | 6.7% | 8.3% | -1.4% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Intellicheck, Inc. ($IDN) | 58.2% | 57.1% | 80.0% | 85.5% | 91.3% |
| Image Sensing Systems, Inc. ($ISNS) | 74.7% | 77.1% | 71.0% | 79.9% | 80.9% |
| National Instruments Corporation ($NATI) | 74.4% | 74.1% | 74.5% | 74.5% | 75.4% |
| Cognex Corporation ($CGNX) | 77.9% | 77.2% | 75.2% | 75.6% | 74.4% |
| Applied DNA Sciences Inc ($APDN) | | | 82.2% | 77.3% | 69.1% |
| |
|---|
| Median (60 companies) | 41.7% | 41.8% | 40.1% | 41.5% | 40.9% |
|---|
| FLIR Systems, Inc. ($FLIR) | 49.0% | 48.4% | 46.2% | 47.7% | 50.7% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Cognex Corporation ($CGNX) | 32.9% | 30.1% | 31.9% | 36.0% | 30.1% |
| Coherent, Inc. ($COHR) | 14.2% | 16.7% | 18.9% | 24.9% | 26.6% |
| Hollysys Automation Technologies, Ltd. ($HOLI) | 21.3% | 26.9% | 23.5% | 16.1% | 23.9% |
| Electro Scientific Industries, Inc. ($ESIO) | -10.1% | -19.1% | -2.0% | -17.8% | 23.1% |
| Badger Meter, Inc. ($BMI) | 16.9% | 16.7% | 18.6% | 20.1% | 18.7% |
| |
|---|
| Median (60 companies) | 5.3% | 3.9% | 3.0% | 3.0% | 3.3% |
|---|
| FLIR Systems, Inc. ($FLIR) | 20.7% | 22.8% | 21.3% | 20.0% | 21.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Wrap Technologies Inc ($WRTC) | | | | | 61.4% |
| ClearSign Combustion Corporation ($CLIR) | | 80.3% | 22.1% | 17.4% | 17.7% |
| LightPath Technologies, Inc. ($LPTH) | 16.8% | 5.0% | 6.5% | 7.8% | 7.7% |
| Giga-tronics Inc ($GIGA) | 1.7% | 0.1% | 1.3% | 0.3% | 7.0% |
| Applied DNA Sciences Inc ($APDN) | 8.4% | 3.9% | 16.1% | 3.1% | 6.8% |
| |
|---|
| Median (60 companies) | 1.8% | 1.9% | 2.1% | 1.6% | 2.3% |
|---|
| FLIR Systems, Inc. ($FLIR) | 4.0% | 4.4% | 2.2% | 2.3% | 1.7% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Evans & Sutherland Computer Corp ($ESCC) | | | 83.3% | 39.6% | 55.3% |
| Electro Scientific Industries, Inc. ($ESIO) | -11.7% | -19.7% | -7.1% | -22.9% | 31.5% |
| Coherent, Inc. ($COHR) | 9.9% | 13.1% | 15.6% | 24.0% | 21.5% |
| Zebra Technologies Corporation ($ZBRA) | 3.3% | 0.9% | 2.2% | 10.2% | 20.8% |
| Cognex Corporation ($CGNX) | 18.3% | 15.6% | 17.7% | 25.6% | 20.1% |
| |
|---|
| Median (72 companies) | 3.3% | 1.8% | 1.8% | 1.8% | 0.9% |
|---|
| FLIR Systems, Inc. ($FLIR) | 13.1% | 15.6% | 14.2% | 12.8% | 14.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Itron, Inc. ($ITRI) | 2.1x | 1.9x | 1.0x | 2.0x | 12.3x |
| Track Group Inc ($TRCK) | | | | | 12.2x |
| Mesa Laboratories, Inc. ($MLAB) | 0.7x | 1.1x | 1.7x | 2.0x | 3.5x |
| Trimble Inc. ($TRMB) | 1.3x | 1.7x | 1.1x | 1.3x | 3.4x |
| MTS Systems Corporation ($MTSC) | -0.0x | -0.4x | 5.8x | 3.9x | 3.2x |
| |
|---|
| Median (35 companies) | -0.8x | -0.9x | -0.9x | -0.8x | -0.9x |
|---|
| FLIR Systems, Inc. ($FLIR) | -0.5x | -0.3x | 0.4x | -0.3x | -0.2x |
