UTC, Other Security Industry Firms Report Mostly Positive Quarterly Earnings

Find out how UTC, FLIR Systems, Mecury Security and Anixter Int’l fared in their most recent quarterly financial reports.

Several publicly traded companies that play in the security industry are reporting quarterly results this week. Below is an overview for United Technologies Corp., FLIR Systems, Mercury Security and Anixter Int’l. Included are security sector comments from executives who discussed their company’s performance during earnings conference calls.

United Technologies Corp. (NYSE: UTX)
UTC reported first-quarter profit and revenue that topped Wall Street estimates despite what its chief executive called a slow-growth global economy. The Farmington, Conn.-based manufacturer of aerospace parts, building security and HVAC equipment posted earnings per share of $1.43 on profit of $1.19 billion. Adjusted for one-time gains and costs, earnings were $1.47 per share.

Revenue for the January-March period was $13.36 billion, up slightly from the year-ago quarter. Profit for was down 17% from the first quarter of 2015. Analysts surveyed by Bloomberg expected per-share earnings of $1.40 per share on net income of $1.16 billion. Revenue was expected to be $13.19 billion.

Net sales for the quarter were down in three UTC businesses: Otis; Climate, Controls and Security; and UTC Aerospace Systems. Sales rose in the quarter at Pratt & Whitney.

“Notwithstanding a slow-growth global macro environment, we remain confident in our full-year 2016 EPS outlook of $6.30 to $6.60 per share,” UTC President and CEO Gregory Hayes said via a press release. “As we look to the future, our focused portfolio of industry leading franchises is well-positioned to deliver on our commitments and create significant long-term shareowner value.”

FLIR Systems (NASDAQ: FLIR)
Wilsonville, Ore.-based FLIR Systems said first-quarter revenue totaled $379.5 million, up 10% from $344.5 million in the same quarter a year earlier. On a constant currency basis, first-quarter revenue was up 12% from the prior year.

Operating income for the quarter that ended March 31 was $57.4 million, compared with $65.8 million in the first quarter of 2015. FLIR said profitability in comparison to the prior year was negatively affected by product mix shifts, higher production costs and unusually low corporate expenses in the prior year.

The company reported a first-quarter profit of $1.1 million, or 1 cent a diluted share, compared with $47.9 million, or 34 cents a share, in the quarter a year earlier.

FLIR said its profit for the current year’s quarter was negatively affected by the recording of $40 million of tax reserves related primarily to a previously disclosed ongoing dispute between the European Commission and the Belgium government over tax legislation. Excluding the tax reserve expense, earnings were 30 cents a diluted share. Cash provided by operations in the first quarter totaled $44.9 million.

During an earnings call, FLIR said its largest drivers of the revenue growth came from the Detection, Security, OEM & Emerging, and Surveillance segments increasing 61%, 21%, 20% and 10%, respectively.

FLIR’s Security segment posted revenue of $47.1 million, up 21% year-over-year. Visible spectrum products grew nearly 40%, but were partially offset by a year-over-year decline in high-end, high-margin thermal product deliveries. Thermal products are often sold into large installation projects that do not occur on a consistent basis, which can affect thermal product revenue, FLIR COO Thomas Surran said during the call.

“Security operating profitability fell to a loss in the quarter due to gross margins pressure associated with price reductions for certain slower moving Lorex product inventory, product mix shift to lower margin consumer offerings, and higher operating expenses, primarily from the acquisition of DVTEL,” Surran said. “The DVTEL integration is ramping at a measured pace, but we intend to realize meaningful synergies in the coming quarters.”

Mercury Systems (NASDAQ: MRCY)
Chelmsford, Mass.-based Mecury Systems reported operating results for its third quarter of fiscal 2016 were $65.9 million, an increase of $6.3 million or 11%, compared to the same period the previous year.

Income for the third quarter was $4.5 million or 13 cents per share, compared to $4.7 million or 14 per share for the prior year’s third quarter. Third quarter results included $1.7 million or 3 cents per share of acquisition and financing costs. Adjusted earnings were 25 cents per share, compared to 22 cents per share in the third quarter fiscal 2015.

Third quarter fiscal 2016 adjusted EBITDA was $14.6 million, an increase of 27% from $11.5 million in the third quarter of fiscal 2015.

During an earnings call,  CFO Gerry Haines said for the full fiscal year, the company expects revenue in the range of $250.2 million to $253.2 million, an increase of 6.5% to 8% from fiscal 2015.

“Based on Mercury’s strong year-to-date performance and the year-over-year revenue growth anticipated for the fourth quarter, we are raising our adjusted EBITDA guidance for the full fiscal year,” Haines said. “We currently expect adjusted EBITDA for fiscal 2016 of approximately $51 million to $52.5 million, an increase of 15% to 18% from fiscal 2015 and a $2.5 million increase from our prior guidance range for the year.”

Anixter Int’l (NYSE: AXE)
Anixter Int’l of Glenview, Ill., reported first-quarter sales of $1.8 billion, a 31.1% increase year-over-year. Profit increased 19.4% to $22.8 million.

The company reported the following by business segment:

Network & Security Solutions first-quarter sales increased 2.3% year-over-year to $949.1 million, with organic sales up 4.1%. Electrical & Electronic Solutions sales of $506 million increased 14.8% over the same period a year ago, with organic sales growth decreasing 7.1%. Utility Power Solutions sales of $361.1 million increased 1.1 percent on an organic basis.

Excluding the impact of the following items, organic sales were flat year-over-year:

  • $482.6 million favorable impact from the acquisition of Power Solutions
  • $20.4 million unfavorable impact from the lower average price of copper
  • $31.7 million unfavorable impact from the fluctuation in foreign currencies

As a result of the acquisitions of Tri-Ed and Power Solutions, beginning in the first quarter of 2016 Anixter said it has excluded amortization of intangible assets associated with purchase accounting from acquisitions in addition to other items.

During an earnings call, Robert Eck, president and CEO, said the company experienced solid broad-based growth in both the network and security markets, although security growth was lower than anticipated at the beginning of the year.

“[K]eep in mind that project activity can make quarter-to-quarter comparisons difficult. We believe our sales performance was consistent with the market and during the quarter, we were awarded a new contract with a mobile security integrator,” Eck said.


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Although Bosch’s name is quite familiar to those in the security industry, his previous experience has been in daily newspaper journalism. Prior to joining SECURITY SALES & INTEGRATION in 2006, he spent 15 years with the Los Angeles Times, where he performed a wide assortment of editorial responsibilities, including feature and metro department assignments as well as content producing for latimes.com. Bosch is a graduate of California State University, Fresno with a degree in Mass Communication & Journalism. In 2007, he successfully completed the National Burglar and Fire Alarm Association’s National Training School coursework to become a Certified Level I Alarm Technician.

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