FLIR Stock Falls, Admits 'Decelerating' Demand For Temperature Screening
By Joey Walter, Published Aug 07, 2020, 09:46am EDT
(Info+)
Is the boom going to bust for temperature screening? FLIR disappointed investors with their Q2 results acknowledging decelerating demand for temperature screening.
In this report, we examine why FLIR is already on the downswing of its Elevated Skin Temperature (EST) boom and why customers are delaying and calling off their orders.
These delays have caused FLIR to withdraw a previously issued financial guidance for the remainder of 2020, meant to be announced with these results, signaling their postponed bookings to the end of 2020 and uncertainty going forward for investors.
The hit on the “industrial side” could be more related to the DVTEL/Security segment.
The change to “try before you buy” might just mean the mighty FLIR name didn’t carry the product over the finish line and competition worked better as reported on IPVM.
The competition rigged results better... Lots of things to criticize FLIR about but the fact that they do actual thermography instead of a magic proprietary algorithm that made results look more normal than they were is not one, to me.
Lots of things to criticize FLIR about but the fact that they do actual thermography instead of a magic proprietary algorithm that made results look more normal than they were is not one, to me.
This could almost become an MBA business case. I think the market is showing that many of the buyers of these products ultimately know that they don't really work, but they do put on a good show. Thus, is something that has the appearance of being more smart and more trustable better than another product (FLIR) that is likely more accurate overall? I think you could argue both sides of that, it is hard to fault FLIR for taking the ethical side, but I think that side ultimately leads to far fewer sales in the space.
FLIR may have been better off providing the shysters like Feevr with an enhanced product that gave FLIR revenue, but kept them at more of a distance from the actual application side. They are very well equipped to support an OEM business of that type, with likely better net margins, but potentially lower revenue.
Years ago, I had to testify in a law suit about security, mainly the camera system. The entire case was on whether the institution did due diligence to protect people on their property. I think many businesses know these systems aren't accurate but they are buying them to prove diligence in case of a lawsuit. I've only heard of a Wal-Mart lawsuit so far but I think the coronavirus related lawsuits in the next couple of years will be extremely interesting and change the way businesses react to pandemics.
The call transcript also notes how EST camera sales are taking away from available inventory to sell to some of their more traditional temp measurement customers and markets. The EST phase could be doubly bad for FLIR if those customers who cannot get product for traditional uses find new suppliers during this shortage and do not return to FLIR.
They also noted continuous shortfalls in their Security group, which now is no longer really a distinct group, it has been rolled into the Instruments group.
They've also quietly discontinued the much-hyped TruWitness camera in the last quarter, just as it appears that the market for body cameras might actually be growing. On one hand, I can't blame them, TruWitness was only compatible with Latitude VMS, which was not very competitive. On the other hand, if the product was done, why not at least try to capitalize on it?
This fever camera gold rush is similar to the Hikua initiated "race to the bottom", except much more short lived. This is flaming out in record time as the market becomes educated.
"the fever camera is opposite, it created price inflation due to lack of inventory." (referring to the 'race to the bottom comment)
agree - and the explosion of unforeseen customer demand - which could not have been predicted by anyone - coupled with that lack of inventory, also drove the market to cheaper, hand-held solutions 1/10th the price.
wrong or right?
I am interested in both viewpoints - how everyone sees this.
agree - and the explosion of unforeseen customer demand
If and when we are over this pandemic I suspect there are a few manufacturers that will be better prepared for the next one... assuming it isn't 100 years down the line and everyone forgets what happened last time.
Common sense and thorough assessment of business requirements drives the decision to use choose more practical, accurate and cost efficient solutions.
In my opinion, the majority of cameras and kiosks are just snake oil fueled by the Corona-virus gold rush. Too many companies jumped in head first based on hysteria created by media and politics. Many decision makers see the news stories featuring fever cameras and automatically feel they need to have them.
If everyone were to slow down and focus on business requirements, they would realize they could simply implement non-contact thermometers along with changes to policy and procedure to get through these times.
Is that a statement for or against those cameras? :) Overall, I see less fear from the public about the health risks as time goes on. Not to say there are no risks but the fear in April and May was quite high and it seems lower now. To me, that is a bearish sign for fever camera sales, in line with what FLIR was saying in their 3 phases comment.
I can't speak for Flir specifically, because I believe purchases are shifting to lower-cost solutions and that is not an indicator that demand is dropping. Generally speaking, in my view, the speculation that there will be a safe and effective vaccine within 3-4 months that will be widely distributed in 3-4 months after that which will eradicate COVID19 by the end of 2021 and return life to normal is a large part of what is driving demand for EST cameras down.
In 3-4 months, we will see if phase 3 trials even work. We will see if there are enough Americans to trust any vaccine that was rushed through. We will see what regime wins the presidency and what legislation will pass regarding the vaccine. We will see soon if schools and cities are going to get the billions of federal stimulus or not. Let's not forget the ability of the virus to mutate into something worse like has done already with the D614G spike protein making it more infectious. Will businesses get COVID-19 liability protection and, if so, what precautions do they need to take to be eligible?
Demand for EST will go up and down over the next few years as the economic and political landscape shifts.
Speaking with some well-seasoned security directors, there was a consensus that this was an expensive short-term fix which would most likely result in buyer's remorse. Rather, it was something they could do in addition to other measures to prove due care when the lawsuits start to fly. The fear, confusion and uncertainty was initially warranted, but now it has been extended through reckless coverage of poor statistics and anecdotal stories that are not representative of real trends.
Affixing plastic barriers/covers/etc., having ample signage and cultivating employee attitude, sanitizing and distancing, using questionnaires verbally/written/app based, and fitting personnel with proper PPE to conduct screening is a much more cost effective and thorough approach to proving due care.
Someone needs to be coming up with a sanitizable or self-sanitizing breathalyzer. EST has always just been a sliver; a sliver that is not have a reasonable cost versus benefit, at that.
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Comments (18)
Undisclosed Manufacturer #1
The hit on the “industrial side” could be more related to the DVTEL/Security segment.
The change to “try before you buy” might just mean the mighty FLIR name didn’t carry the product over the finish line and competition worked better as reported on IPVM.
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Undisclosed #2
The call transcript also notes how EST camera sales are taking away from available inventory to sell to some of their more traditional temp measurement customers and markets. The EST phase could be doubly bad for FLIR if those customers who cannot get product for traditional uses find new suppliers during this shortage and do not return to FLIR.
They also noted continuous shortfalls in their Security group, which now is no longer really a distinct group, it has been rolled into the Instruments group.
They've also quietly discontinued the much-hyped TruWitness camera in the last quarter, just as it appears that the market for body cameras might actually be growing. On one hand, I can't blame them, TruWitness was only compatible with Latitude VMS, which was not very competitive. On the other hand, if the product was done, why not at least try to capitalize on it?
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Undisclosed End User #3
FLIR Q2 2020 Earnings Call Slides:
FLIR Q2 2020 PPT
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Undisclosed Integrator #4
This fever camera gold rush is similar to the Hikua initiated "race to the bottom", except much more short lived. This is flaming out in record time as the market becomes educated.
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Juan Arango
In Latin America, Flir didn't sell a dime for the lack of presence, professional sales team and the ridiculous prices.
Shame that such a great company is so obtuse finding growing markets.
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Undisclosed Manufacturer #6
Fear, confusion, and uncertainty will keep demand for EST cameras on a fast rollercoaster track
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