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Seeking Alpha: FLIR’s Future

This is an exclusive post I wrote for Seeking Alpha about FLIR and its near term future. It may be found here.

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Defense M&A in Electro Optics Industry

Two acquisitions were announced recently that involve companies designing and making electro-optic systems and software for the defense market. They indicate that the continued investment by the United States, its Allies and other nations around the world into these systems are expected to continue and provide a market for contractors. This as there are now persistent worries that the U.S. and European defense budgets will start declining in the near future.

First BAE Systems (BAE: LSE) announced that they will be acquiring New Hampshire’s Oasys Technology. The total price could be up to $55 million if all conditions are met. Oasys Technology provides engineering services and research to support development of new electro-optics system. By acquiring the company BAE acquires that expertise which should lead to better systems and advanced production capability.

BAE already makes thermal weapon sights in use by the United States, Canada and Australia. These go on weapon systems and vehicles. Last week BAE received an order worth $123 million as part of a five year contract with the U.S. Army. This brings the total value of sales to the U.S. to over $1 billion. BAE also makes thermal imaging and infra-red cameras that may be integrated by other companies.

It was also announced FLIR Systems (FLIR) will acquire ICx Technologies. FLIR as their name implies makes Forward Looking Infra Red (FLIR) and other electro-optical sensor systems for use by military, security and civil customers. ICx will cost the company about $270 million. ICx manufactures sensors and equipment used in a variety of applications. These include those used to detect explosives that have homeland security uses. ICx also designs and builds radar equipment.

These two transactions show that there are opportunities for larger defense contractors to acquire companies that will expand their own product line. These two moves will aid BAE Systems and FLIR in developing more advanced systems and allow them to grow their share of a growing market for advanced optics, sensors and electronic surveillance systems.

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Whither FLIR?

Investors Business Daily has an interesting article about the future of FLIR Systems. With the new Obama Administration and the potential winding down of the wars in Iraq and Afghanistan, FLIR may see its best customer begin cutting back on orders. The U.S. Department of Defense has ordered a variety of different FLIR products to go on aircraft, helicopters as well as to use for ground surveillance and security systems. The Portland Business Journal reports that the company had a record year in 2008 with revenue of over $1 billion. This was about $1.28 a share, and for 2009 the company projects at least $1.40 a share in earnings. FLIR, interestingly, is warning that its earnings will be reduced due to a decline in commercial sales rather then from government customers. The next few years will be interesting for this and many other predominantly defense based companies.

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RAAF Buys FLIR Systems for Patrol Aircraft

The Royal Australian Air Force (RAAF) exercised an option with FLIR Systems to procure more FLIRs for their P-3 maritime patrol aircraft. CNNMoney.com has the press release. The contract option is the first option exercised under an original contract signed last year. The original contract had a value of over $13 million U.S. and no value for the option was released. The contract will upgrade existing FLIR Systems products to HD standard.

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Army buys more force protection FLIR systems

September 11, 2008 by · Comment
Filed under: Contract Awards, FLIR, production program, SMDC, U.S. Army 

FLIR Inc, known more for their aircraft installed systems, won a continuation of the contract to provide ground based systems for base and force protection. The US Army’s Space and Missile Defense Command awarded the $96 M contract. FLIR has won several contracts related to this system which provides surveillance of the areas around bases.

The Associated Press reports here.

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Army buys more FLIR systems for force protection

The US Army awarded FLIR Systems a $30 M contract for more systems to support ground based force protection systems. See a press release here. FLIR Systems has long built sensors for aircraft but recently the US has invested in this technology for the monitoring of perimeters and base security. FLIR Systems has won several contracts and options for this type of equipment while continuing its success with aviation systems.

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FLIR stock hits all time high

FLIR Systems won a contract modification for the Army worth up to $380 M to build force protection systems. See an article here. This adds to an existing ID/IQ contract for the delivery of such systems. FLIR has built equipment for the US Army and other services to go on aircraft, vehicles and now ground mounted systems for surveillance around US bases. The stock closed at over $37 today.

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US Army orders more systems from FLIR Inc

January 15, 2008 by · Comment
Filed under: Contract Awards, FLIR, production program, U.S. Army 

As part of a ID/IQ contract with FLIR Inc, the US Army ordered $17.5 M worth of units for their aircraft. See the press release here. FLIR has provided systems to both the Army and USMC for several years. The Forward Looking Infra-Red systems allow aircraft to detect targets at night.

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