M&A

With Endeavor in tow, FLIR aims to ride unmanned growth wave

Since its spinout from iRobot three years ago, unmanned ground vehicle maker Endeavor Robotics has focused much of its energy on positioning for and pursuing longer-term programs of record with the U.S. military for those platforms.

They have won one in excess of $150 million and are waiting on others they feel good about, all of which is part of the overarching strategy behind FLIR Systems’ acquisition of Endeavor announced Monday for $385 million in cash.

But on FLIR’s fourth quarter and year-end earnings call with investors Wednesday, CEO Jim Cannon sought to paint a broader picture of the unmanned market and what Endeavor brings to the company's portfolio beyond just hopes of winning those Defense Department programs.

“If we did not win any one program that’s pending, that would not have dampened our appetite to bring in Endeavor to be a part of FLIR,” Cannon told analysts. “We have a lot of conviction about the future long-term growth trajectories of unmanned capabilities, not just in DOD but also critical infrastructure industrial applications that require standoff hazardous material management, all the areas where we see ourselves participating in the long term. Unmanned will grow in the decades to come.”

DOD’s approach for programs of record is a shift in thinking away from buying ground robots on a quick-turn basis during the Iraq and Afghanistan wars.

In its place are procurements that factor in the entire lifecycle, including the initial engineering and development phases plus upgrades. This includes sensors, the underlying software that runs the robots and facilitates interoperability with other platforms.

Endeavor’s production strategy has also factored in the sensor and software arena along with the robotic platforms themselves. FLIR is already widely known in the market for its thermal imagery technology and sensor lineup.

It is “that piece in between,” Cannon said, where FLIR aims to “get these sensors to be more intelligent, more autonomous, more processing at the edge. (That) is an area of specific investment that we’re making organically that will benefit these two deals.”

There is some data that shows the market is rebounding from a slowdown after the drawdowns of forces from Iraq and Afghanistan. Federal market intelligence firm Govini found that unmanned ground vehicle spending almost tripled between fiscal years 2014 and 2017.

Against that backdrop, Endeavor is FLIR’s latest big bet that it can ride the wave of overall growth in the unmanned market. Just two weeks ago FLIR said they acquired aerial drone maker Aeryon Labs for $200 million. FLIR’s other major deal in the unmanned market was for Prox Dynamics in late 2016 for $134 million.

FLIR is far from the only company that is using acquisitions as the entry point into the unmanned ground arena. Textron late last year acquired Howe and Howe Technologies to help create a more well-rounded autonomous lineup that touches the air, land and sea domains.

And of course there is QinetiQ North America, the main competitor of Endeavor's in the unmanned ground market. QNA and Endeavor are in a head-to-head contest for the $429.1 million "Common Robotic System Individual" contract to build robots at weights of less than 25 pounds for dismounted forces.

“There are a lot of folks interested in the unmanned space but we believe Endeavor with the fielding of the technology it already has with the lessons that it’s learned with the (intellectual property) portfolio that it has is well-positioned,” Cannon said.

About the Author

Ross Wilkers is a senior staff writer for Washington Technology. He can be reached at rwilkers@washingtontechnology.com. Follow him on Twitter: @rosswilkers. Also find and connect with him on LinkedIn.

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