FLIR Systems Inc., a leader in thermal imaging devices that include defense applications, could significantly improve its prospect for new Pentagon and homeland security contracts with the recently announced acquisition of a fast-growing maker of advanced sensors.
Observers noted that ICx Technologies, which FLIR is acquiring for roughly $274 million in cash, also makes integrated advanced sensing technologies for airport security and critical infrastructure applications.
Industry analysts said the acquisition expands FLIR’s capabilities into advanced sensors for chemical, biological, radiological, nuclear, and explosives (CBNRE) detection for defense and homeland security markets.
In addition, the move enhances FLIR’s existing intelligence surveillance and reconnaissance product suite through the addition of ICx’s advanced radars and integrated platforms. ICx’s operations are being integrated into FLIR’s Government Systems Division, the company said.
“We are pleased to announce this compelling transaction,” said Earl Lewis, FLIR’s president and CEO. “The transaction presents an attractive opportunity to add ICx’s market-leading CBRNE technologies to FLIR’s product portfolio and leverage FLIR’s global infrastructure to reduce costs and drive growth.”
Moreover, ICx has products in the vanguard of current Pentagon priorities as defense officials prepare to cut back on big-ticket weapons programs to focus on asymmetric warfare and counterterrorism.
Indeed, in a recent 72-page presentation for investors released before the merger announcement, ICx executives highlighted how their technologies can combat the use of improvised explosive devices (IEDs) often employed against coalition forces in Iraq.
To date, the company says it has derived some $50 million in related sales with a potential for ten times that amount in the next few years. A hand-held explosives monitor made by ICx ranks as the leading one fielded by the U.S. military and is employed at hundreds of checkpoints, the company says, adding that the device has defeated dozens of threats.
ICx also focuses its sensor activities on biological and chemical warfare. This is a potentially huge market for the ICx-FLIR team. The investor presentation shows sales in this segment to date of about $50 million but with a total market potential of about $2 billion.
On the domestic security front, ICx sensors have been deployed at more than 450 airports in the U.S. Another 14 nations have expressed interest in the technology, ICx officials say.
Despite its sophisticated technologies, ICx has faced recent financial challenges. For the six months ended June 30, the company registered a roughly 19.5 percent decline in revenue as profits slid nearly 60 percent to $1.5 million.
By contrast, FLIR said revenues in the same period rose 12 percent to $618 million. Net income came in at $115.3 million, up about 5 percent from the similar period in 2009.
Based in Portland, Ore., the thermal imaging company announced last April it had received a $12.4 million order from the U.S. Army for the company’s Star SAFIRE(R) II stabilized multi-sensor systems. The units delivered under the order will be deployed on UH-60 helicopters to support Medevac operations.
FLIR executives said the order adds to the more than 200 Star SAFIRE systems already deployed on UH/HH-60 Medevac helicopters.
Just two weeks before that contract, FLIR said it had received a $13.5 million order from the Naval Surface Warfare Center for FLIR’s BRITE Star(R) II multi-sensor target designation systems. FLIR said the order was related to a previously announced contract worth $125.3 million over five years.