Thermal imaging manufacturer FLIR Systems (FLIR) took a hard hit on Tuesday after it reported preliminary earnings for the third quarter of 2013. The company cut its full-year guidance and showed lower-than-expected earnings. Shares declined almost 14 percent on the news.
Reliance on Government Markets Hurts Earnings
FLIR reported that weakness in those markets with exposure to the federal government drove a drop in profits below their expectations. FLIR now expects to report revenues of $358 million to $360 million, or $0.32 to $0.33 per share, for the quarter ending on September 30, 2013. This means full-year 2013 revenue projections have been reduced to $1.45 billion to $1.5 billion, or $1.38 to $1.45 per share, down from previously reported guidance of $1.5 billion to $1.6 billion, or $1.56 to $1.66 per share.
"While we are disappointed in the preliminary results for the third quarter, we have also taken steps, above and beyond those related to our strategic review, to reduce costs in response to the current operating environment, and we remain highly confident in our strategy and outlook for the future," said CEO Andy Teich. "Ongoing uncertainty in the U.S. government is likely to continue to affect our performance in the fourth quarter, and our revised guidance is intended to reflect this environment. We believe our CDMQ(R) strategy is the best alternative for government customers to acquire high performance intelligence, surveillance, reconnaissance, targeting, and detection capabilities with low cost, high quality, and outstanding value. We remain very enthusiastic about the opportunities in our commercial business in 2014 and beyond, and are committed to continuing to innovate for our customers and deliver value to our shareholders, as illustrated by our recent new product introductions and today's strategic business realignment."
FLIR also reported that it would be closing as many as six of its not-to-scale sites and shifting production to other, larger facilities.
"The realignment of operations announced today is the culmination of a strategic operations review we began this past summer to further enhance operating efficiency and profitability and to improve our internal execution with better communication, collaboration, and cooperation across the company," said Teich.