FLIR Systems Inc. (FLIR) received a contract for its Star SAFIRE® HD family of digital, high-definition, full-spectrum imaging systems valued at about $52.1 million from the Naval Air Warfare Center Aircraft Division. The contract is for a period of three years and is of a fixed price nature.
Initially, an order of $25.6 million of Star SAFIRE® 380-HD systems and related support was placed with the company. Further, it can obtain over a span of the next three years $26.5 million of Star SAFIRE® 380-HD and Star SAFIRE® HD systems. As part of the Navy's Persistent Ground Surveillance System (PGSS) program, the systems are planned to be installed on aerostats.
The work under this contract is expected to be provided with FLIR's facilities in Wilsonville, OR. From September 2011, FLIR will start the delivery of the first phase of the order.
The company has developed extensive competencies in the design and integration of numerous capabilities and payloads into integrated systems or sub-systems. Competencies such as stabilization, packaging and systems integration allow it to effectively combine a wide variety of technologies and payloads for designing and manufacturing complex systems to suit its customers’ needs.
However, FLIR derives significant revenue from contracts or subcontracts with the U.S. government agencies. A significant reduction in the purchase of its products by these agencies would have an adverse impact on its business. The funding of contracts awarded to the company depends on the overall budget of the United States government and appropriation process, which is beyond its control. Major competitors of FLIR Systems are L-3 Communications Holdings Inc. (LLL) and Lockheed Martin Corporation (LMT).
FLIR Systems Inc. is a leader in design, manufacture and marketing of thermal imaging systems. Its products are used in a wide variety of applications in commercial, industrial and government markets, internationally as well as domestically. It offers a wide variety of system configurations to suit specific customer requirements. The company’s business is organized into three divisions: Government Systems, Commercial Vision Systems and Thermography Products.
We continue to maintain a Neutral rating on FLIR System for the long term. The company has a Zacks #3 Rank (Hold recommendation) over the next one-to-three months.
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