FLIR Systems Reports Record Fourth Quarter and Full Year 2008 Financial Results

Revenue from the Company’s Government Systems division increased 50% over the fourth quarter of 2007, to a record $172.0 million, driven by strength in airborne and land-based applications. Revenue from the Company’s Commercial Vision Systems division increased 12% over the fourth quarter of last year, to $42.4 million, reflecting strong growth in the security and surveillance market. Revenue from the Company’s Thermography division decreased 3% from the fourth quarter of last year, to $87.9 million. Excluding the effect of exchange rates, total Thermography revenue increased by approximately 3% in the quarter. The Extech Instruments and Cedip Infrared Systems acquisitions contributed approximately $13.2 million in Thermography revenue in the fourth quarter of 2008, compared with $5.4 million in the fourth quarter of 2007. Thermography unit volumes, excluding Extech and Cedip products, increased by 33% in the fourth quarter of 2008 compared to the fourth quarter of 2007.

Revenue for the year ended December 31, 2008 was $1,077.0 million, up 38% compared to $779.4 million for the year ended December 31, 2007. Operating income for 2008 was $284.5 million, up 48% from $191.8 million during 2007. Net income for 2008 was $203.7 million, or $1.28 per diluted share, compared with 2007 net income of $136.7 million, or $0.89 per diluted share. Cash provided by operations during the year was $218.3 million.

The backlog of firm orders for delivery within the next twelve months was approximately $663 million at December 31, 2008, an increase of $13 million during the quarter, and an increase of $270 million, or 69% compared with backlog at December 31, 2007. Backlog in the Government Systems division was $552 million, up $5 million during the quarter, as demand remained strong across multiple product lines. Backlog in the Commercial Vision Systems division was $91 million, up $10 million during the quarter due primarily to strong demand for its security and surveillance product lines. Backlog in the Thermography division was $19 million, down $3 million during the quarter.

“We are very pleased with our financial performance in 2008, as we recorded our eighth straight year of record revenue, operating income and earnings per share, and achieved the highest operating income margin and cash flow from operations in the Company’s history,” noted Earl Lewis, President and CEO. “We are well positioned for continued growth, and each of our divisions remains focused on their core strategies. Our 2009 outlook anticipates continued growth in all three divisions, particularly our Government Systems and Commercial Vision Systems businesses, which are supported by strong backlogs. We have taken a more cautious outlook for Thermography due to expected weak economic conditions through 2009.”

Revenue and Earnings Outlook for 2009
FLIR also announced that it expects net revenue in fiscal 2009 to be in the range of $1.2 billion to $1.25 billion, an increase of approximately 14% compared with 2008, and net earnings to be in the range of $1.40 to $1.47 per diluted share, an increase of approximately 12% compared with 2008. This guidance assumes slower revenue growth in the Thermography division than originally expected as a result of continued economic weakness, and assumes a tax rate for the year of 32% to 34%, and an average diluted share count of approximately 164 million shares.