FLIR Systems announced financial results for the second quarter ended June 30, 2016. Second quarter 2016 revenue was $402.7 million, up 2 percent compared to second quarter 2015 revenue of US$393 million.
FLIR Systems announced financial results for the second quarter ended June 30, 2016. Second quarter 2016 revenue was $402.7 million, up 2 percent compared to second quarter 2015 revenue of US$393 million. Year-to-date revenue of $782 million was 6 percent above the prior year. Operating income in the second quarter was $65.2 million, compared to $70.5 million in the second quarter of 2015. Profitability in comparison to the prior year was negatively impacted by changes in product mix, manufacturing cost under-absorption, and additional costs associated with the ramp up of an internal low-cost optics capability.
Second quarter 2016 net earnings were $45.4 million, or $0.33 per diluted share, compared with net earnings of $50.5 million, or $0.36 per diluted share in the second quarter a year ago. Net earnings in the second quarter of 2016 were negatively impacted by a $2 million write-down of a non-core minority investment. Excluding this write-down, adjusted earnings per diluted share were $0.34. Cash provided by operations in the second quarter reached $81.7 million, FLIR's highest quarterly cash flow since 2013, and was driven by reductions in working capital.
Year-to-date revenue of $782 million was 6 percent above the prior year.
Revenue from the Surveillance segment was $113.4 million, an increase of 5 percent from the second quarter results last year. The Instruments segment contributed $78.1 million of revenue during the second quarter, down 14% from the prior year, due to continued softness in mid-range handheld thermal products and strong MERS-related revenue in the prior year. The Security segment recorded revenue of $63.4 million in the second quarter, up 6 percent from the prior year. FLIR's OEM & Emerging Markets segment had $57 million of revenue, an increase of 23 percent over the prior year. Revenue from the Maritime segment was $55.2 million, which was up 6% from the second quarter of 2015. The Detection segment contributed $35.7 million of revenue, a decrease of 2 percent from the prior year.
FLIR's backlog of firm orders for delivery within the next twelve months was approximately $629 million as of June 30, 2016, an increase of $16 million, or 3 percent, during the quarter and an increase of $93 million, or 17 percent, over the $536 million balance at the end of the second quarter of 2015.
Revenue from the Surveillance segment was $113.4 million, an increase of 5 percent from the second quarter results last year.
"We are encouraged by the growth we saw in our bookings and backlog during the second quarter, and our initiatives to improve working capital utilization resulted in strong cash flow," said Andy Teich, President and CEO of FLIR. "As we anticipated, profitability during the second quarter was lower than our historic trend given an unusual product mix in our Surveillance segment as well as higher costs in our Instruments and Security segments. While we expect product mix to return to normal levels in the second half of the year, we have initiated a plan to reduce our costs which we expect to improve our overall profitability in the second half.
Revenue and Earnings Outlook for 2016
Based on financial results for the first half of the year and the outlook for the remainder of the year, FLIR expects revenue in 2016 to be in the range of $1.6 billion to $1.65 billion, and adjusted net earnings to now be in the range of $1.60 to $1.65 per diluted share. This guidance excludes the impact of discrete tax items, the investment write-down described above, and charges related to the cost reduction initiative planned for the second half.
Dividend Declaration
FLIR's Board of Directors has declared a quarterly cash dividend of $0.12 per share on FLIR common stock, payable September 2, 2016, to shareholders of record as of close of business on August 19, 2016.