FLIR Systems Inc. (FLIR - Analyst Report) received a $50.0 million repair and maintenance services contract from the U.S. Army. The services will be used by the Army's force protection surveillance systems, which are being used throughout the world. The contract is for a period of five years. In the first year, repair and maintenance services of $10.2 million will be provided to the Army with an option to get $39.8 million of similar services over a period of next four years.
FLIR's Foreign Sales operations in the Middle East will perform the work under this contract. The contract will also be executed from FLIR’s facilities in Wilsonville, OR, and Billerica, MA. Advanced surveillance systems from FLIR are being used by the Army to protect men and women, who are on the front lines of conflict.
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 - Analyst Report) and Lockheed Martin Corporation (LMT - Analyst 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, such as commercial, industrial and government markets, both 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.
FLIR Systemhas a Zacks #3 Rank (Hold recommendation) over the next one-to-three months.