FLIR Acquires Lorex

Author: John Honovich, Published on Oct 25, 2012

A stunning deal of a truly odd couple: Thermal camera leader FLIR has acquired home/budget surveillance specialist Lorex for $59 million. While not well known, Lorex has quietly become one of the biggest surveillance companies, on pace for ~$75 Million in revenue this year. Not only is this sizeable but the combination is extremely atypical. This deal has the potential to be a huge move for a FLIR or a comedy, I suppose. In this note, we dig into the details and analyze FLIR's plans.

[Note, for background, see the Investor's call transcript which provides extensive details on the plans for this deal.]

Key *******

** *********** ******** *** **** ** ** **** ******* **********. While *** ******* ** * ********** ** ********** *** ******** infrastructure, ** ******* ************** ** ********* ******** *** ******* *********.

*****, ** *** ***** ****, *** ***** *** ******** ******** model. * **** ******, *** **** ******** **** ******* **** market ************, ****** *** ******* *** *** ********* (*.*.,******).

** *** **** **** ********, ********* ******* *** **** ********** each ***** *********.

** **** ***, **** ********** * *** *******:

  • "****** ******* ******* ** *****'* ******** ********* *****"
  • "* ************ ********-***** ******** ******* (*********)" **** **** **** ** **** **** *** ************ ******** market
  • "******** ** ****'* ************* ************ ** *****'* ****** ***** ******** presence"

*** **** ***** ** ************* *** **** *************. **** ** Flir *** **** **** **** ***** ******** ***************, ** **** not **** **** ****** ** *** ****** *******. *******, *** other *** *** ***** ***********.

Adding ******* ** *** *** ***

**** ****** ***** ** ****** ** *** ***-***:

"**** ** ***** ** **** **** **** **'** ******** ****** as *** ******** *** * ****, **** ****, *********** ****** thermal **** ****** **** ****** *** ***** ******, ** *** will, ********* ********** **** ***** ***** **, *** ******* **** in *** ******** *** ******* ** ** *****."

**** *****, * '*****' **** ******* ****** ** $*,*** ***** a ********* ***** ****** ** * *** *******, ** ****.

**** *** ***** ** * ****** ************* ********** ******* **** *** ***** *** ************ / ******** market:

"**** ** ****** *** **** *** *** ******* ** **** our ********** *** ****** ** **** ***** ******* ****, ***** we ***** **** ** ************* ******** **** ** ***** ** revenue ****** *** ******."

*** ***** **** ** **** ***** ***** *** ** **** lots ** *******. **** ***** *****'* ****** **** ***** ** 500,000+ *******, ******* **** ***** *** ******* ** *** ****** volume ***** **** **** *** ** ********* *** ***** ******* of ********* ********* *******.

*** **** ********** ** *** ***** *************** *** ******* *** ************ ******** **** ******* ******* ******* that *** *** **** ********* **** **** ****** **** ******, including ****.

Competing ******* ****, *****, ***** **** **

**** **** *************, **** ** ******* ** ** ******* ** end ** *** ***** ** ******** *******, *** **** *******:

"**** ** ***** ********* **** ** **** ** *****, * think, ***** ** **** **** ***** ** ** ****** * full ***** ** ******** **** **** *** *** **** * thermal ****** **** ****."

** ** **, **** *** ********* *****'***************:

"*** **** ** *****, * *****, ** ************ **** **** will ** ** *** ********* ****, ***** ** *** ************ integrator ****** ** *******. *** ****'* ***** *** ***** *************, I *****, **** * ********** *******, * ********** ******* ** the *********** ****."

***** ********* ** * '************' ********, ** ** ********* ** the ***** *** ** *** ******. ***********, **** *** ******* to **** **** ** ** **** ** **** ******* *** biggest ******* ** *** ******:

"*****, ** ********** ***** **** * **** ******* ****** *** then ******* ** ******** **** * *****, ****, *****, ********* like ****, **********-***** ******. *** ** **** **** ** *** offer ** **** ********** ** ********** ***** ** * ******* that **** **** * ********** ***** *********** ****** ***** ***********. And ** **** *****, ***** ************** ********* *** ********* **** are ******** ** ******* **** ** ** **** ** *** thermal *****. ** * ***** **'** **** **** ******* ** take ** **** ***** ** ***********."

***** *****, **** *** ***** *** *** ********* **** *** thermal ******, ** *** ********* ** ****'* ******* ** ****** fire ** *** ************ ****** ****** ******* ********* ******* ****. While ***** *** **** ********** ******** *** *** **** ****** side, **** **** ********* *********** ** ***** ********* ****, ***** and *****.

**********

***** *** ********* **** *** *****, *** ***** **** *** reasonable. **** ** ********* ***** *** ~$** ******* ***, ******* less **** *****'* ********* **** ******* ** ~$** ******* ***. And *********'* ~$* ******* ****** **************, ** ** * ********** **** ***********. *******, ** ** a *********** ********* ****** ****, ** ********, ***** ******* ****** Flir's ******** ** *** ****** ** ***** **** **** **** foolish *** **** * ******. **** **** **** *** **** will ********* ** ** *********** *** ** ***** *******.

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