FLIR Acquires Retail Camera Provider; Announces 3rd-Quarter Results
PORTLAND, Ore. — FLIR Systems has agreed to acquire Lorex Technology Inc., a Markham, Ontario, Canada-based provider of consumer and professional-grade video surveillance systems, in a cash deal worth about $60 million.
In a press release, FLIR described Lorex as “a pioneer in home security video surveillance systems that can be installed by the user as well as a provider of video surveillance products to security system integrators.”
Lorex provides homes and businesses bundled video surveillance systems and equipment, including connected visible light video cameras, illuminated infrared cameras, DVRs, video monitors, baby monitors, and wearable action sports cameras. The company sells its solutions through retailers such as Costco, BJ’s Wholesale, Amazon.com, BestBuy.com, as well as through distributors of large-scale security solutions. The acquisition is expected to close by the end of 2012.
One of the major goals that FLIR wants to accomplish with this acquisition is to lower the cost of thermal technology so it’s more appealing for consumers and small businesses, FLIR President Andy Teich tells SSI.
“We’ve lowered the cost of equipment considerably over time,” he says. “Eight years ago the least expensive system was probably $15,000. Today, we’ve got cameras all the way down to $1,500, so there has been a 10x reduction in cost. Even with that, thermal imaging technology isn’t at a cost level that would be attractive to retail market consumers.”
FLIR, a leading provider of thermal imaging cameras and systems, announced the deal on Thursday (Oct. 25) during an investor call to discuss financial results for the third quarter ending Sept. 30. Lorex sells in excess of 500,000 cameras each year and FLIR expects that number to rise to more than one million within a couple of years, according to optics.org, a Web portal that covers the optics and photonics industry.
So just how does FLIR intend to implement its technology into the Lorex product line?
“Ultimately, you’ll see a product that offers both thermal and visual capability together with some level of analytics,” Teich says. “You can think of it in two ways. One is sort of a ‘best of both worlds’ solution, so that users get the best that visible imaging has to offer when there is sufficient light for visible imaging to perform well. Then users will also get the best that thermal has to offer when there isn’t sufficient light for the visible channel to perform well.”
The company also plans to embed low-level analytics into cameras, which will provide useful triggers for alarms for homeowners and small business owners, according to Teich.
“Thermal is really good when it comes to analytics because it’s much more reliable and much easier to process,” he explains.
Because thermal technology is still carries a hefty price tag, initially, FLIR will market the cameras in the critical infrastructure, enterprise business and high-end residential markets. However, the aim is to enter all channels that sell security cameras, according to Teich.
“As costs come down, we ultimately see the opportunity to sell thermal technology to everyone that Lorex sells to today, which covers the gamut of consumer to small business to enterprise,” he says.
FLIR said its sales of $332 million for the quarter were in line with expectations, but down 11% compared to the same period in 2011. Reduced sales from the company’s government systems segment led the decline.
The company said its backlog of orders for delivery within the next 12 months was approximately $565 million as of Sept. 30, an increase of $67 million during the quarter. Backlog in its government systems division was $392 million, increasing $58million during the quarter. A backlog in its commercial systems division was $173 million, an increase of $9 million during the quarter.
“Our third-quarter results were as planned. In addition, we were encouraged by the order flow during the quarter and the corresponding increase in our ending backlog,” Earl Lewis, president and CEO of FLIR, said in the press statement. “We were pleased to see both divisions increase margins over last quarter despite headwinds in many of our markets. Additionally, the anticipated acquisition of Lorex is highly complementary to our long-term commercial strategy and is expected to be accretive to 2013 net earnings.”
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