Teledyne Flir Quickly Adds to Revenue Stream

 Teledyne Technologies Inc. completed a single acquisition this year, but it was a big one.

The Thousand Oaks aerospace, marine and digital imaging products manufacturer paid $8.2 billion for Flir Systems Inc., an Arlington, Va. developer of cameras and sensors used in military, industrial, automotive, marine and public safety applications.

Upon the closing of the transaction in May, Flir was included in Teledyne’s Digital Imaging business segment and operates under the name Teledyne Flir.

According to a release from Teledyne, under the terms of the agreement, Flir stockholders received $28 per share in cash and 0.0718 shares of Teledyne common stock for each Flir share, which implies a total purchase price of approximately $57.40 per Flir share based on Teledyne’s closing price on May 13.

Teledyne then-Executive Chairman Robert Mehrabian said in January when the deal was announced that while the companies’ respective business models are similar, their products are complementary with minimal overlap, having imaging sensors based on different semiconductor technologies.

“For two decades, Teledyne has demonstrated its ability to compound earnings and cash flow consistently and predictably,” Mehrabian said in a statement. “Together with Flir and an optimized capital structure, I am confident we shall continue delivering superior returns to our stockholders.”

Mehrbian took over as chief executive of Teledyne in October. 

Jim Cannon, chief executive of Flir, said that the company was excited about the transaction at the time it was announced.

“Together, we will offer a uniquely complementary end-to-end portfolio of sensory technologies for all key domains and applications across a well-balanced, global customer base,” Cannon said in a statement.

Smooth integration

In October, when announcing third quarter earnings, Mehrabian said that he was pleased with the integration of Teledyne Flir into the company as well as its performance in the first full quarter as part of Teledyne.

In the third quarter, Flir contributed $474 million of incremental net sales to the company’s overall $1.3 billion in revenue. 

In connection with the acquisition, Teledyne incurred pretax expenses of $82.6 million, the company said in a release announcing third quarter earnings. 

Teledyne secured cash financing for the transaction with a weighted average borrowing cost of less than 2 percent, it said in a release. 

Mehrabian said during a conference call with analysts to discuss third quarter earnings that Teledyne was accelerating the pace of plant synergies with Flir. It was expected to reach its annualized cost savings target of $80 million before the middle of next year “as opposed to the end of 2022 as we described in our July earnings call and compared with 2024 as noted when we announced the transaction in January,” Mehrabian said during the call. 

Within a few weeks of the May closing date, Teledyne Flir received contracts for work.

In June, the subsidiary announced a $4 million contract under the Pentagon’s Compact Vapor Chemical Agent Detector program to develop the first mass-wearable chemical detector for U.S. troops.

The dual-sensor device will detect chemical warfare agents and toxic industrial chemicals, as well as flammable gases and enriched or depleted oxygen levels that may indicate an explosive atmosphere, Teledyne Flir said in a release.

In October, the company announced the launch of its ION M640x quadcopter drone.

The unmanned aircraft, designed for the U.S. military, weighs about 4 pounds and is rated for operation in demanding environments, including rain and wind.

Mehrabian mentioned unmanned aircraft in a statement from when the acquisition closed in May.