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FLIR SystemsInc. (FLIR - Free Report) has declared its preliminary revenue and earnings per share results for the second quarter of fiscal 2011. The company expects to report revenues of about $390 million for the three months ended June 30, 2011.

Earnings per share are expected to be approximately 18 cents for the quarter. After deducting the net after tax impact of a previously announced litigation settlement and related expenses, earnings per share is expected to be approximately 35 cents. The Zacks Consensus estimate of earnings from continuing operation for second quarter of fiscal 2011 is 38 cents.

Sales in the Commercial Systems division continued to be strong. Results in the quarter was, however, negatively impacted by sustained weak demand in the Government Systems division. The company is analyzing its guidance for full-year 2011 and will declare the new guidance with its scheduled second-quarter earnings call on July 22, 2011.

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 to design and manufacture complex systems to suit its customers’ needs.

However, FLIR derives significant revenue from contracts or subcontracts from 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 - Free Report) and Lockheed Martin Corporation (LMT - Free Report) .

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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