Business Wire | Aug 6, 2020 07:30AM EDT

FLIR Systems Announces Second Quarter 2020 Financial Results

Aug. 06, 2020

ARLINGTON, Va.--(BUSINESS WIRE)--Aug. 06, 2020--FLIR Systems, Inc. (NASDAQ: FLIR) ("FLIR" or the "Company"), a world leader in the design, manufacture, and marketing of intelligent sensing technologies, today announced financial results for the second quarter ended June 30, 2020.

Commenting on FLIR's second quarter results, Jim Cannon, President and Chief Executive Officer, said, "I am extremely pleased with our strong performance and operational execution in the quarter amid unprecedented challenges. This quarter marked the second consecutive quarter of record-breaking total backlog, and we continue to build a robust, sustainable pipeline with several key program wins. Additionally, we are beginning to realize cost savings from the successful execution of Project Be Ready, which aims to better align resources with higher growth opportunities, while reducing costs. We also continue to see demand for our Elevated Skin Temperature-or EST-solutions and we are extremely proud of the role our products and technologies continue to play in helping mitigate the spread of COVID-19. Importantly, our continued emphasis on cash optimization has provided financial flexibility as we enter the second half of the year."

Mr. Cannon continued, "I am humbled and inspired by the commitment of our employees around the globe and their dedication to our mission to save lives and livelihoods during this crucial time. As we look ahead, we remain focused on ensuring the safety of our employees, delivering the mission-critical products our customers need and continuing to create value for our shareholders. We are confident that the purposeful diversity of our product portfolio will continue to be a competitive strength for FLIR in the quarters ahead. We look forward to emerging from this difficult environment as an even stronger company."

Summary Results

Revenues for the quarter were $482.0 million, consistent with the prior year quarter. Bookings totaled $546.3 million in the quarter, representing a book-to-bill ratio of 1.13. Backlog at the end of the quarter was a record $912.8 million, reflecting a 12.8% increase relative to the prior year quarter.

GAAP Earnings Results

Gross profit for the quarter was $252.2 million, compared to $233.4 million in the prior year quarter. Gross margin increased to 52.3% from 48.4% in the prior year quarter, primarily attributable to favorable product mix in the Industrial Technologies segment. Earnings from operations for the quarter was $99.8 million, compared to $63.7 million in the prior year quarter. Operating margin increased to 20.7% from 13.2% in the prior year quarter, primarily as a result of higher revenue and gross profit in the Industrial Technologies segment as well as decreases in intangible asset amortization, marketing, travel, and deferred compensation expenses. Diluted EPS was $0.47, compared to $0.34 in the prior year quarter. The weighted average diluted share count for the quarter was 132 million, down from 137 million in the prior year quarter primarily due to stock repurchase activity initiated in the first quarter of 2020.

Non-GAAP Earnings Results

Adjusted gross profit for the quarter was $261.9 million, compared to $246.3 million in the prior year quarter. Adjusted gross margin increased to 54.3% from 51.1% in the prior year quarter, primarily attributable to favorable product mix in the Industrial Technologies segment. Adjusted operating income for the quarter was $126.1 million, compared to $95.8 million in the prior year quarter. Adjusted operating margin increased to 26.2% from 19.9% in the prior year quarter, primarily as a result of higher revenue and gross profit in the Industrial Technologies segment and decreases in marketing, travel, and deferred compensation expenses. Adjusted diluted EPS was $0.64, compared to $0.52 in the prior year quarter.

Segment Results

Industrial Technologies Segment

Industrial Technologies revenues for the quarter were $300.2 million, representing an increase of $15.7 million, or 5.5% compared to the prior year quarter. The revenue increase was primarily attributable to heightened demand for EST solutions as a result of the COVID-19 pandemic, partially offset by lower volume in commercial end markets such as maritime and security products.

Industrial Technologies segment operating income was $107.1 million, compared to $71.6 million in the prior year quarter. Segment operating margin increased to 35.7% from 25.2% in the prior year quarter, primarily attributable to the aforementioned higher revenue and associated gross profit, favorable product mix, and lower marketing, travel, and deferred compensation expenses.

Industrial Technologies bookings totaled $334.0 million for the quarter, representing a book-to-bill ratio of 1.11. Backlog at the end of the quarter was $350.7 million, reflecting a 48.1% increase relative to the prior year quarter, primarily as a result of award timing and increased orders for EST solutions.

Defense Technologies Segment

Defense Technologies revenues for the quarter of $181.8 million decreased by $15.7 million, or 7.9% compared to the prior year quarter. The revenue decrease was primarily attributable to the completion of certain contracts that contributed to revenue in the prior year quarter partially offset by increased volumes for unmanned systems.

Defense Technologies segment operating income was $41.2 million, compared to $45.8 million in the prior year quarter. Segment operating margin decreased to 22.6% from 23.2% in the prior year quarter, primarily attributable to the aforementioned lower revenue and associated gross profit.

Defense Technologies bookings totaled $212.2 million for the quarter, representing a book-to-bill ratio of 1.17. Backlog at the end of the quarter was $562.1 million, reflecting an 1.8% decrease relative to the prior year quarter, primarily as a result of order and subsequent deployment timing for a few major programs.

Balance Sheet and Liquidity

FLIR ended the second quarter of 2020 with $333 million in cash and cash equivalents and approximately $365 million in borrowing capacity under its credit facility based on current profitability levels and leverage covenants.

After the end of the quarter, on July 20, 2020 the Company announced the pricing of a public offering of $500 million aggregate principal amount 2.5% notes due August 1, 2030 (the "Notes"). FLIR expects to receive net proceeds of approximately $494 million, after deducting underwriting discounts and estimated offering expenses. The proceeds from the sale of the Notes are expected to be used to redeem FLIR's $425 million in aggregate principal amount of 3.125% notes due June 15, 2021 (the "2021 notes"), and for general corporate purposes, which may include funding for working capital, investments in its subsidiaries, capital expenditures, or acquisitions. On August 3, 2020, the Company completed the offering and the Notes were issued. The Company intends to redeem the 2021 notes in full on August 19, 2020.

COVID-19 Update

As previously announced, FLIR's businesses have been deemed essential for critical infrastructure under the Cybersecurity and Infrastructure Security Agency exemption, and all of its manufacturing facilities remain operational. FLIR has implemented stringent safety protocols and continues to monitor recommendations and guidelines issued by the Centers for Disease Control, the European Centre for Disease Prevention, and the World Health Organization to ensure the health and safety of its employees.

Given the high degree of uncertainty in the current macroeconomic environment resulting from COVID-19, the Company remains focused on cash optimization activities, disciplined capital allocation, and executing Project Be Ready to simplify its product portfolio and better align resources with higher growth opportunities while reducing costs.

Shareholder Return Activity

FLIR's Board of Directors has declared a quarterly cash dividend of $0.17 per share on FLIR common stock, payable on September 4, 2020, to shareholders of record as of close of business on August 21, 2020.

FLIR expects to continue to provide returns to its stockholders in the form of quarterly dividends. However, in accordance with the Company's focus on cash optimization activities given the macroeconomic uncertainty resulting from COVID-19, FLIR's share repurchase program remained paused throughout the second quarter of 2020.

Financial Outlook

The COVID-19 pandemic has generated significant uncertainty, including an overall lack of visibility into future demand trends and economic conditions in the markets in which FLIR operates. The Company is continuing to closely monitor the impact of the pandemic on its operational and financial performance and take action as necessary; however, the magnitude and duration of the outbreak including its impact to FLIR's operations, supply chain partners and customers remains uncertain. As a result, the Company has withdrawn its previously issued guidance for the full year ending December 31, 2020.

Conference Call

FLIR has scheduled a conference call at 9:00 a.m. Eastern Time today to discuss its results for the quarter. The details for the conference call can be found below. A simultaneous webcast of the conference call and the accompanying summary presentation may be accessed online from a link in the Events & Presentations section of the Company's Investor Relations website at www.FLIR.com/investor. A replay will be available upon completion of the conference call at this same internet address. Summary second quarter and historical financial data may be accessed online from the Financial Info Database link under the Financials & Filings section of the Company's Investor Relations website.

Second Quarter Financial Results Conference Call

Date: Thursday, August 6, 2020

Time: 9:00 a.m. Eastern Time / 6:00 a.m. Pacific Time

1-877-407-9039 (Domestic)Dial-in: 1-201-689-8470 (International)

Conference 13705998ID:

Webcast: http://public.viavid.com/index.php?id=140427

For those unable to participate during the live broadcast, a replay of the call will also be available from 12:00 p.m. Eastern Time onReplay: August 6, 2020 through 11:59 p.m. Eastern Time on August 20, 2020 by dialing 1-844-512-2921 (domestic) and 1-412-317-6671 (international) and referencing the replay pin number: 13705998.

About FLIR Systems, Inc.

Founded in 1978, FLIR Systems is a world-leading industrial technology company focused on intelligent sensing solutions for defense and industrial applications. FLIR Systems' vision is to be "The World's Sixth Sense," creating technologies to help professionals make more informed decisions that save lives and livelihoods. For more information, please visit www.flir.com and follow @flir.

Forward-Looking Statements

Statements, estimates or projections in this release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements that are not statements of historical fact (including statements containing the words "believes," "plans," "anticipates," "expects," "estimates," or similar expressions) should be considered to be forward looking statements. Such statements are based on current expectations, estimates, and projections about FLIR's business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors, including the following:

* risks related to United States government spending decisions and applicable procurement rules and regulations; * negative impacts to operating margins due to reductions in sales or changes in product mix; * impairments in the value of tangible and intangible assets; * unfavorable results of legal proceedings; * risks associated with international sales and business activities, including the regulation of the export and sale of our products worldwide and our ability to obtain and maintain necessary export licenses, as well as the imposition of significant tariffs or other trade barriers; * risks related to subcontractor and supplier performance and financial viability as well as raw material and component availability and pricing; * risks related to currency fluctuations; * adverse general economic conditions or volatility in our primary markets; * our ability to compete effectively and to respond to technological change; * risks related to product defects or errors; * our ability to protect our intellectual property and proprietary rights * cybersecurity and other security threats and technology disruptions * our ability to successfully manage acquisitions, investments and divestiture activities and integrate acquired companies; * our ability to achieve the intended benefits of our strategic restructuring; * our ability to attract and retain key senior management and qualified technical, sales and other personnel; * risks to our supply chain, production facilities or other operations, and changes to general, domestic, and foreign economic conditions, due to the COVID-19 pandemic; and * other risks discussed from time to time in filings and reports filed with the Securities and Exchange Commission.

COVID-19 may exacerbate one or more of the aforementioned and/or other risks, uncertainties and other factors more fully described in the Company's reports filed with the SEC. In addition, such statements could be affected by general industry and market conditions and growth rates, and general domestic and international economic conditions. Such forward-looking statements speak only as of the date on which they are made and FLIR does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this release, or for changes made to this document by wire services or internet service providers.

Definitions and Non-GAAP Financial Measures

Bookings are defined as contractual agreements awarded during the reporting period. Backlog is defined as total estimated amount of future revenues to be recognized under negotiated contracts.

We report our financial results in accordance with United States generally accepted accounting principles (GAAP). As a supplement to our GAAP financial results, this earnings announcement contains some or all of the following non-GAAP financial measures: (i) adjusted gross profit, (ii) adjusted gross margin (defined as adjusted gross profit divided by revenue), (iii) adjusted operating income, (iv) adjusted operating margin (defined as adjusted operating income divided by revenue), (v) adjusted net earnings, and (vi) adjusted diluted EPS. These non-GAAP measures of financial performance are not prepared in accordance with GAAP and computational methods may differ from those used by other companies. Additionally, these non-GAAP measures should not be considered a substitute for any other performance measure determined in accordance with GAAP, and the Company cautions investors and potential investors to consider these measures in addition to, not as a substitute for, its consolidated financial results as presented in accordance with GAAP. Each of the non-GAAP measures is adjusted from GAAP results as outlined in the "GAAP to Non-GAAP Reconciliation" table included within this earnings release.

In calculating non-GAAP financial measures, we exclude certain items to facilitate a review of the comparability of our core operating performance on a period-to-period basis. Items excluded consist of: (i) separation, transaction, and integration costs, (ii) amortization of acquired intangibles, (iii) restructuring expenses and asset impairment charges, (iv) discrete legal and compliance matters, and (v) discrete tax items. We do not consider these items to be directly related to our core operating performance. Non-GAAP measures are used internally to evaluate the core operating performance of our business, for comparison with forecasts and strategic plans, and as a factor for determining incentive compensation for certain employees. Accordingly, supplementing GAAP financial results with these non-GAAP financial measures enables the comparison of our ongoing operating results in a manner consistent with the metrics reviewed by management. We believe that these non-GAAP measures, when read in conjunction with our GAAP financials, provide useful information to investors by facilitating:

* the comparability of our ongoing operating results over the periods presented; * the ability to identify trends in our underlying business; and * the comparison of our operating results against analyst financial models and operating results of other public companies that supplement their GAAP results with non-GAAP financial measures.

The following are explanations of each type of adjustment that we incorporate into non-GAAP financial measures:

* Separation, transaction, and integration costs - Represents transaction and integration costs related to divestiture and acquisition initiatives. * Amortization of acquired intangibles - Represents amortization expense associated with acquired intangible assets. * Restructuring expenses and asset impairment charges - Represents employee separation expenses, facility termination costs, and other expenses as well as goodwill, intangible asset, and inventory impairment charges associated with Company restructuring activities. * Discrete legal and compliance matters - Represents costs incurred associated with certain legal and compliance matters that are not representative of ongoing operational costs. These expenses are primarily attributable to an administrative agreement with the U.S. Department of State (the "Consent Agreement") to address and remediate certain historical practices associated with U.S. and international trade control laws and regulations. Such costs include a Directorate of Defense Trade Controls penalty, expenses associated with retention of a Special Compliance Officer, and remedial actions required by the terms of the Consent Agreement or otherwise necessary to remedy and achieve full compliance with U.S. and international trade control laws and regulations. * Discrete tax items - Represents tax expenses and benefits related to discrete events or transactions that are not representative of the Company's estimated tax rate related to ongoing operations. These items include charges and reversals of provisions associated with certain unrecognized tax benefits, benefits or charges associated with the windfalls or shortfalls resulting from vesting and exercise activity of share-based compensation, benefits associated with the reversal of previously recorded valuation allowances against certain deferred tax assets, and other discrete items not included in the annual effective tax rate associated with our ongoing operations.

Adjusted net earnings and adjusted diluted EPS include an estimate to reflect the tax effect of the discrete items identified above. The tax effect is calculated by applying the Company's overall estimated effective tax rate, excluding significant discrete items, to earnings before income taxes.

FLIR Systems, Inc.

Consolidated Statements of Income

(In thousands, except per share amounts)(Unaudited)

Three Months Ended Six Months Ended

June 30, June 30,

2020 2019 2020 2019

Revenue $ 482,015 $ 481,998 $ 932,938 $ 926,734

Cost of goods sold 229,815 248,590 461,370 459,465

Gross profit 252,200 233,408 471,568 467,269

Operating expenses:Research and development 56,012 52,957 109,859 100,637

Selling, general and 88,676 113,713 204,918 218,203 administrativeRestructuring expenses 7,702 3,001 28,486 3,610

Total operating expenses 152,390 169,671 343,263 322,450

Earnings from operations 99,810 63,737 128,305 144,819

Interest expense 6,962 7,272 13,923 12,788

Interest income (127 ) (438 ) (476 ) (1,495 )

Other expense (income), net 11,081 (1,220 ) 9,766 646

Earnings before income taxes 81,894 58,123 105,092 132,880

Income tax provision 20,637 12,005 28,411 25,014

Net earnings $ 61,257 $ 46,118 $ 76,681 $ 107,866

Net earnings per share:Basic earnings per share $ 0.47 $ 0.34 $ 0.58 $ 0.80

Diluted earnings per share $ 0.47 $ 0.34 $ 0.57 $ 0.79

Weighted average sharesoutstanding:Basic 130,831 135,519 132,213 135,530

Diluted 131,687 137,084 133,389 137,105

Note: The Company made certain reclassifications to the prior years' financial statements to conform them to the presentation as of and for the three and six months ended June 30, 2020 that management has determined had no material effect for the periods presented.

FLIR Systems, Inc.

Consolidated Balance Sheets

(In thousands)(Unaudited)

June 30, December 31,

2020 2019

ASSETSCurrent assets:Cash and cash equivalents $ 332,958 $ 284,592

Accounts receivable, net 304,981 318,652

Inventories 433,908 388,762

Prepaid expenses and other current assets 114,429 116,728

Total current assets 1,186,276 1,108,734

Property and equipment, net 255,770 255,905

Deferred income taxes, net 41,393 39,983

Goodwill 1,340,989 1,364,596

Intangible assets, net 222,123 247,514

Other assets 110,746 120,809

Total assets $ 3,157,297 $ 3,137,541

LIABILITIES AND SHAREHOLDERS' EQUITYCurrent liabilities:Accounts payable $ 147,487 $ 158,033

Deferred revenue 30,319 28,587

Accrued payroll and related liabilities 79,981 72,476

Accrued product warranties 15,887 14,611

Advance payments from customers 14,142 28,005

Accrued expenses 32,892 40,815

Accrued income taxes 24,273 14,735

Other current liabilities 34,721 27,349

Credit facility 191,000 16,000

Long-term debt, current portion 12,465 12,444

Total current liabilities 583,167 413,055

Long-term debt, net of current portion 643,265 648,419

Deferred income taxes 40,405 53,544

Accrued income taxes 57,243 55,514

Other long-term liabilities 82,516 95,576

Shareholders' equity:Preferred stock, $0.01 par value, 10,000 sharesauthorized; no shares issued at June 30, 2020 andDecember 31, 2019Common stock, $0.01 par value, 500,000 sharesauthorized, 131,106 and 134,394 shares issued at 10,778 16,692 June 30, 2020 and December 31, 2019,respectively, and additional paid-in capitalRetained earnings 1,925,732 2,020,686

Accumulated other comprehensive loss (185,809 ) (165,945 )

Total shareholders' equity 1,750,701 1,871,433

Total liabilities and shareholders' equity $ 3,157,297 $ 3,137,541

FLIR Systems, Inc.

Consolidated Statements of Cash Flows

(In thousands)(Unaudited)

Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019

Cash flows fromoperating activities:Net earnings $ 61,257 $ 46,118 $ 76,681 $ 107,866

Adjustments toreconcile net earningsto net cash provided byoperating activities:Depreciation and 23,525 32,253 47,750 48,915 amortizationStock-based 13,241 9,188 20,887 17,278 compensationLoss on disposal of 594 - 3,585 - assetsMinority interest 4,803 - 4,803 - impairment chargesDeferred income taxes (348 ) 1,965 (513 ) 2,187

Other, net 6,370 (2,292 ) 3,218 (3,620 )

Increase (decrease) incash, net ofacquisitions, resultingfrom changes in:Accounts receivable (855 ) 6,643 11,263 (19,128 )

Inventories (32,311 ) (6,132 ) (46,764 ) (23,604 )

Prepaid expenses and 1,214 (13,431 ) 1,596 (11,487 )other current assetsOther assets 6,070 (47 ) 5,679 3,612

Accounts payable (12,072 ) 427 (10,480 ) 26,446

Deferred revenue (242 ) 6,394 1,898 1,863

Accrued payroll and (19,291 ) (5,216 ) (8,207 ) (13,273 )other liabilitiesAccrued income taxes 18,375 (6,163 ) 12,116 (7,885 )

Other long term (7,181 ) (1,917 ) (9,497 ) (5,869 )liabilitiesNet cash provided by 63,149 67,790 114,015 123,301 operating activities Cash flows frominvesting activities:Additions to property (14,525 ) (8,641 ) (27,242 ) (17,781 )and equipment, netProceeds from sale of - - - 2,973 assetsBusiness acquisitions, - (22,900 ) - (602,456 )net of cash acquiredMinority interest and 304 - 304 (5,000 )other investmentsNet cash used in (14,221 ) (31,541 ) (26,938 ) (622,264 )investing activities Cash flows fromfinancing activities:Net proceeds fromcredit facility and - - 175,000 723,054 long-term debt,including currentportionRepayment of credit (3,114 ) (3,095 ) (6,135 ) (378,095 )facility and long-termdebtRepurchase of common - (24,998 ) (150,000 ) (49,996 )stockDividends paid (22,278 ) (23,033 ) (45,006 ) (46,064 )

Proceeds from sharesissued pursuant to 5,850 7,629 7,309 17,350 stock-basedcompensation plansTax paid for net shareexercises and issuance (9,192 ) (9,333 ) (10,071 ) (10,346 )of vested restrictedstock unitsOther financing - (103 ) - (522 )activitiesNet cash (used in) (28,734 ) (52,933 ) (28,903 ) 255,381 provided by financingactivities: Effect of exchange rate 4,149 1,206 (9,808 ) 323 changes on cash andcash equivalents Net increase (decrease) 24,343 (15,478 ) 48,366 (243,259 )in cash and cashequivalentsCash and cash 308,615 284,363 284,592 512,144 equivalents, beginningof periodCash and cash $ 332,958 $ 268,885 $ 332,958 $ 268,885 equivalents, end ofperiod

FLIR Systems, Inc.

Segment Performance

(In thousands)(Unaudited)

Three Months Ended Six Months Ended

June 30, June 30,

2020 2019 2020 2019

SEGMENT REVENUEIndustrial Technologies Segment $ 300,198 $ 284,489 $ 576,613 $ 555,875

Defense Technologies Segment 181,817 197,509 356,325 370,859

SEGMENT EARNINGS FROM OPERATIONSIndustrial Technologies Segment $ 107,137 $ 71,633 $ 171,402 $ 140,652

Defense Technologies Segment 41,155 45,786 74,309 92,676

SEGMENT OPERATING MARGINIndustrial Technologies Segment 35.7% 25.2% 29.7% 25.3%

Defense Technologies Segment 22.6% 23.2% 20.9% 25.0%



Note: The Company made certain reclassifications to the prior years' financial statements to conform them to the presentation as of and for the three and six months ended June 30, 2020 that management has determined had no material effect for the periods presented.

FLIR Systems, Inc.

GAAP to Non-GAAP Reconciliation(In thousands, except per share amounts)(Unaudited) Three Months Ended June 30, 2020 Separation, Amortization Restructuring Discrete transaction, of expenses and legal and Discrete Adjusted As Reported and acquired asset compliance tax Non- integration intangibles impairment matters items GAAP Results costs assets chargesGross profit $ 252,200 $ 410 $ 9,253 $ - $ - $ - $ 261,863

Operating (152,390 ) 1,513 2,501 7,702 4,900 - (135,774 )expenses

Earnings from 99,810 1,923 11,754 7,702 4,900 - 126,089 operations

Non-operating (17,916 ) - - - - - (17,916 )expense, net

Earningsbefore income 81,894 1,923 11,754 7,702 4,900 - 108,173 taxes

Income tax (20,637 ) (429 ) (2,621 ) (1,717 ) (1,093 ) 2,377 (24,120 )provision

Net earnings $ 61,257 $ 1,494 $ 9,133 $ 5,985 $ 3,807 $ 2,377 $ 84,053



Gross margin 52.3 % 0.1 % 1.9 % 0.0 % 0.0 % 0.0 % 54.3 %

Operating 20.7 % 0.4 % 2.5 % 1.6 % 1.0 % 0.0 % 26.2 %margin



Net earningsper diluted $ 0.47 $ 0.01 $ 0.07 $ 0.05 $ 0.03 $ 0.02 $ 0.64 share

Weightedaveragediluted 131,687 131,687 131,687 131,687 131,687 131,687 131,687 sharesoutstanding





Three Months Ended June 30, 2019



Separation, Amortization Restructuring Discrete transaction, of expenses and legal and Discrete Adjusted As Reported and acquired asset compliance tax Non- integration intangibles impairment matters items GAAP Results costs assets chargesGross profit $ 233,408 $ 492 $ 12,429 $ - $ - $ - $ 246,329

Operating (169,671 ) 2,765 8,617 3,001 4,733 - (150,555 )expenses

Earnings from 63,737 3,257 21,046 3,001 4,733 - 95,774 operations

Non-operating (5,614 ) - - - - - (5,614 )expense, net

Earningsbefore income 58,123 3,257 21,046 3,001 4,733 - 90,160 taxes

Income tax (12,005 ) (668 ) (4,314 ) (615 ) (970 ) 90 (18,483 )provision

Net earnings $ 46,118 $ 2,589 $ 16,732 $ 2,386 $ 3,763 $ 90 $ 71,677



Gross margin 48.4 % 0.1 % 2.6 % 0.0 % 0.0 % 0.0 % 51.1 %

Operating 13.2 % 0.7 % 4.4 % 0.6 % 1.0 % 0.0 % 19.9 %margin



Net earningsper diluted $ 0.34 $ 0.02 $ 0.12 $ 0.02 $ 0.03 $ 0.00 $ 0.52 share

Weightedaveragediluted 137,084 137,084 137,084 137,084 137,084 137,084 137,084 sharesoutstanding





Six Months Ended June 30, 2020



Separation, Amortization Restructuring Discrete transaction, of expenses and legal and Discrete Adjusted As Reported and acquired asset compliance tax Non- integration intangibles impairment matters items GAAP Results costs assets chargesGross profit $ 471,568 $ 1,148 $ 18,638 $ - $ - $ - $ 491,354

Operating (343,263 ) 6,027 5,012 28,486 13,981 - (289,757 )expenses

Earnings from 128,305 7,175 23,650 28,486 13,981 - 201,597 operations

Non-operating (23,213 ) - - - - - (23,213 )expense, net

Earningsbefore income 105,092 7,175 23,650 28,486 13,981 - 178,384 taxes

Income tax (28,411 ) (1,448 ) (4,773 ) (5,749 ) (2,822 ) 5,743 (37,460 )provision

Net earnings $ 76,681 $ 5,727 $ 18,877 $ 22,737 $ 11,159 $ 5,743 $ 140,924



Gross margin 50.5 % 0.1 % 2.1 % 0.0 % 0.0 % 0.0 % 52.7 %

Operating 13.8 % 0.8 % 2.5 % 3.0 % 1.5 % 0.0 % 21.6 %margin



Net earningsper diluted $ 0.57 $ 0.04 $ 0.14 $ 0.17 $ 0.08 $ 0.04 $ 1.06 share

Weightedaveragediluted 133,389 133,389 133,389 133,389 133,389 133,389 133,389 sharesoutstanding





Six Months Ended June 30, 2019



Separation, Amortization Restructuring Discrete transaction, of expenses and legal and Discrete Adjusted As Reported and acquired asset compliance tax Non- integration intangibles impairment matters items GAAP Results costs assets chargesGross profit $ 467,269 $ 492 $ 16,107 $ - $ - $ - $ 483,868

Operating (322,450 ) 9,242 10,867 3,610 8,075 - (290,656 )expenses

Earnings from 144,819 9,734 26,974 3,610 8,075 - 193,212 operations

Non-operating (11,939 ) - - - - - (11,939 )expense, net

Earningsbefore income 132,880 9,734 26,974 3,610 8,075 - 181,273 taxes

Income tax (25,014 ) (1,995 ) (5,530 ) (740 ) (1,655 ) (2,226 ) (37,161 )provision

Net earnings $ 107,866 $ 7,739 $ 21,444 $ 2,870 $ 6,420 $ (2,226 ) $ 144,112



Gross margin 50.4 % 0.1 % 1.7 % 0.0 % 0.0 % 0.0 % 52.2 %

Operating 15.6 % 1.0 % 2.9 % 0.4 % 0.9 % 0.0 % 20.8 %margin



Net earningsper diluted $ 0.79 $ 0.06 $ 0.16 $ 0.02 $ 0.05 $ (0.02 ) $ 1.05 share

Weightedaveragediluted 137,105 137,105 137,105 137,105 137,105 137,105 137,105 sharesoutstanding

Note: The Company made certain reclassifications to the prior years' financial statements to conform them to the presentation as of and for the three and six months ended June 30, 2020 that management has determined had no material effect for the periods presented.

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CONTACT: Investor Relations Lasse Glassen Addo Investor Relations Investors@flir.com (424) 238-6249