Teledyne Technologies (TDY) 2 Nov 172017 Q3 Earnings call transcript

Ladies and gentlemen, thank you for standing by. And welcome to the Teledyne Technologies Third Quarter Earnings Call. At this time, all lines are in a listen-only mode. Later, we will conduct a questions-and-answer session and instructions will be given at that time. [Operator Instructions] And as a reminder, today’s conference is being recorded. turn over to Jason like now the to conference VanWees. I’d ahead. go Please

like to you, is Release this M&A before Strategy I’d This morning Conference at the welcome VanWees, And Thank our everyone. morning President Call. Jason We good earnings XXXX Third Teledyne’s Quarter Senior released Vice Teledyne. market to Earnings everyone earlier and opened.

Vice General and Teledyne’s Robert and Cibik. Mehrabian; for Chief Pichelli; we Senior Joining Senior Officer CEO, COO, Main; will Sue President, and me President Chairman, today Secretary, CFO, President After Counsel, Robert are Compliance remarks ask Vice and and questions. Al Melanie your by Sue,

results periodic to be simultaneously started call in differ tell course, may all this materially. SEC and In webcast forward-looking this earnings webcast we being get dial-in yes reminded subject and via and and have to disclosures, one made is month. potential for release you assumptions, replay as caveats approximately our various Of the and filings, the selective risks actual noted that to avoid order me statements available before a are attorneys will morning

Robert. Here’s

Thank you, you I’m joining the time all thank margin. to everyone. Jason, operating morning, call. record in achieved earnings third per and report that we all share and And, pleased quarter, our time for earnings good GAAP record GAAP

In especially performed orders eXv. to overall third we record growth segment was of X%, exceeding our and cash achieved free Teledyne as Instrumentation excellent including exceed Furthermore majority sales instrumentation quarter. our Digital a sales government total the from first each and organic businesses. organic in results also growth were group any due acquisitions, as Marine strong sales product well and to for continue Our and second defense company flow image exceptionally well contributions strong Imaging particular, -

the third within product segments among as performance, in well was and quarter, I In balanced our more as segment. on our sales want our on line products along some end our offer Before perspective growth markets. detail, commenting segments business to well

growth example, CMOS-based XX%. several applications, dental cameras we in exceeded to X-ray the segment flat displays, imaging. and development resolution, and or detectors this in largest higher organic for Imaging growth medical detectors, For for years pleased of drivers our were machine panel vision digital such OEM see low-dosage X-ray this Digital as accelerating. are adoption The investment of now After

double our lines, rates. including geospace digit instrumentation of segment, imaging Our our test or micro-electromechanical organically increased digit rates. and and and systems environmental businesses mapping product Digital organically sales both increased double Imaging government instruments MEMS at In at systems also also measurement electronic

three total Finally orders this based in in quarters organic achieved began our increasing growth XX% we in consecutive about have sales and now government businesses year-over-year representing of businesses. these long cycle of year, early

acquisition As performance major strong offshore such our as integration as energy, I successful our well business mentioned underlying as the Teledyne’s quarter, in last demonstrate and headwinds, balanced the consistent strategy absence execution. result and of

year, with and last records and of points quarterly margin XX per XX%. more related to over charges revenue despite earnings EBITDA increasing to the charges basis also Teledyne. XX just historical eXv to margin Turning with operating increased margin basis operating XX.X% back growing the to share total increased compared for both these acquisition, points, results, even GAAP even were

we history in results the acquisition-related XXXX full-year earnings which the of presentation outlook, short of XXXX and adjusted the only first quarter non-GAAP and in our a simply comment eXv of quarter our the on highlighted given one Finally, was the expenses. magnitude

not end and that it specific we outlook assets. worth adjusted nonrecurring cost to we adjusted noting have as for outlook expenses, for year. is full-year a which for intangible never transaction of We the adjusted expect providing are we ongoing only expenses while amortization do such have So, such full-year this

For full-year would share of $X.XX approximately represent amortization non-cash per or expense. about million $XX XXXX, alone reference in

instruments largely We of last due Now overall In products sales Marine increase turning that devices included operating of margins each cable increase. the wireless operating primarily between to XX% has data air margin stabilized. systems, protocol to from growth analyzers overall sales quarter margin of Research Segment systems science continued increased in measurement product by increased margins to of sales and troubleshoot Hanson our healthy to test increased and to and higher test in of profit sales laboratory these Sales major the result X.X% used solution. domain monitoring interconnect Marine our SSI. four operating continued industrial also This to Sales sales interoperability, also organically. business Sales segments, year. and engineers increased continued to and of and life instrumentation due gross systems of and segment, referred acquisition line in as XX.X% increased was Instrument of as and product improvement our well electronic communication second which aggregate increased year-over-year as believe in line XX.X%, instruments, a at Instrument. environmental and for example category. currently XX.X% third be scientific

growth increased Digital organic Turning sales Imaging segment, to the XX.X%. XX.X% with of third quarter

third the and adding Each X-ray in for increase growth applications. headwind was As a strong transaction our of both aerospace primarily as the to was healthy States. broad at as of overall In amortization manufacturing Segment result science lower of United due from of declined in vision cruise contributor and strong a with million Systems marine and greater for machine cost across resulted operating $XX of from margin acquisitions some basis some detectors first margin sales million quarter from and segment, intangibles as missile commercial margin X.X% to operating programs increased offer outlook. for industrial the revenue Teledyne mentioned particularly defense Electronics, concluding operating turbine life perspective eXv cameras margin and increased earlier, revenue Defense quarter $X.X primarily the In remained about charges segment, eXv. my engines. third year, approximately sales the sales points, relocation XX based despite organic Mexico our Electronics on Defense basis Teledyne and In sales to our XX.X%. of programs the related want revenue the X.X% Nevertheless, increased XXX and last from of margin a improved increased GAAP I Engineered eXv. quarter. points facility comments, margin higher manufacturing well from the from

and have would acquisition compared be our organic X.X% that the at noted noted $XX leverage to from last total growth approximately times company the July we this quarter of to across quarter, flow, XXXX the six cash or Given results business strong X.X% this our now believe of third first in X.X also months X% following our SSI balanced the includes growth to strong And, for portfolio, X.X full-year and eXv. reduced end times quarter. million Teledyne the acquisition Due year. of in we

I the strong given broad currently call sheet, integration, Finally pursuing over Sue. in our now and turn we acquisition balance of all our success a stability opportunities. will markets, each range the across to are of

and cash operating same full-year the morning, third flow of compared activities cash higher by good for Free the by The tax and million discuss you, from of cash the flow outlook. quarter the of by impact and higher cash first expenditures quarter, less from income XXXX payments. cash financials XXXX. that not for reflected third million income net then was operating some of period Thank provided XXXX eXv quarter Robert, I will In activities quarter everyone. offset Teledyne is $XX partially from that our $XXX.X discuss were million $XX.X activities $XX.X $XX.X in Capital flow for covered in cash XXXX the capital with additional operating primarily was and higher was Robert, I of amortization will expense fourth compared million less $XX.X and resulted compared $XX.X and million capital a the third debt XXXX. ratio XXXX. for XXXX. $X.X debt same to $XX.X quarter XX.X%. period to of million with the and third in quarter million in the to quarter for the third net same of the Depreciation approximately acquisition $XX.X of debt from of with approximately million billion leases, of of largely quarter billion net is compared of We eXv. increase in The period amortization cash million ended the capital in expenditures depreciation $X.X flow the

compared the $X.X XXXX compensation third X.X third Our of end the at of end of million $X.X second times of third Stock compared quarter option quarter the leverage quarter of to quarter ratio the XXXX. at in XXXX million expense X.X was times was XXXX. the with in the of

related contained XXXX Digital of have eXv segment. in related the to Imaging charges, of charges Non-recurring quarter third the pre-tax Regarding million ended. now specifically charges our acquisition acquisition $X.X

by or of total However full-year $XX.X share. per be XXXX impacted results a million approximately $X.XX will

Turning be to discrete that $X.XX, earnings share of back to share. will $X.XX. per earnings XXXX to $X.XX full-year in for XX.X%. to effective currently share call full-year pass I will The $X.XX items per to outlook $X.XX. rate the expected the our fourth XXXX excluding $X.XX this is per share our our the the Robert. is to range of management any to of full-year are quarter GAAP prior $X.XX tax outlook, of in outlook be GAAP earnings And, range $X.XX Adjusted in believes to expected to the XXXX per be compares now

and to would ready We the questions to take ahead. your you answers proceed Sue. if operator like please go with you, are now Thank questions,

question will with go Jefferies. Okay. line come of Greg [Operator the from first Our ahead. Instructions] Please Konrad

we been been Hey R&D to just pieces quarter. of lot of in amortization. I just Imaging. the Have and margin reset good QX some judging the expectations morning, from Digital hoping Historically drivers performance? margin with maybe great moving for there’s segment of kind start was that discuss and a could

and exceptionally the margins in of think both Greg, up were QX DALSA real because eXv. primarily high, I

lower Some of our Imaging know and one the that our Imaging, is from. imaging, them have which research no - businesses, Digital we as components other our our take one are laboratory, profit margin is Teledyne infrared is which of you Digital other two we at in

for I the bit cameras into may go from maybe So, fourth against that we these think other and XXXX. provide think production, moderate moving display QX quarter, a margins thing in which out panel we somewhat would is flat this the little

Since said you’ve a mean, had first the going see you growth that’s up things give of organic - maybe where in XXXX? you Can just quarter. kind indication think through good of segue, three accelerating as I you brought XXXX and here, you’ve an

organic, not as the great, think into I easy. looking of future, that it’s course, Yes,

growth X%, would my our but where about still higher, again we’re could organically, expectations is be a X% as that’s thoughts around go now at setting it said, total where it be a I our think are. And, I I higher time little the little expectation. are X%, think present be could but right

me, And, QX, can maybe go in given margin segment? segment of first just for kind margin past just looking the to my mean, kind at you. Thank you’ve outlook one I of just to full for by question, last year you discuss back

Yes, I can try.

up quarter instrumentation quarter maybe aerospace you would over we’ll hope of million and think the helps. think XX.X% Imaging I about Defense Electronics XX.X%, of A XX%, engineered XX.X%. first XX.X%, end think XX%, little taken recall lower, and $X.X we was eXv, a charges around be throughout segment I to first I probably we’ve that margin so because over Digital as systems And, total about XX.X%.

you. Thank

question next the go Needham line ahead. and Ricchiuti from Please Our Company. with Jim comes

Robert, thank just seeing area, Imaging, you’re is that activity growth the Digital good you, automation? going in just related back mainly demand the more machine industrial the is display or morning. seeing broadly factory across growth, vision and to Hi, you’re

course, that panel sensors it’s some say cameras broader I think I we a displays, of we cameras, we for introduced for in domain. two have would - make, that than but we display, have dimensional that, some flat growth balance custom

produce We’re can package. I indicated for make our which now have and level called developed have also way starting - we we as before to infrared sensors,

$XX very that important, - flat So, it’s business drives than in flat in about broader is million it our a I but there. year for panel, panel think

flat and the that is crystal technology? And, newer both OLED panel liquid display

Yes.

that variations that either was segments You I across quarter, the four Imaging, significant were fairly business think was for any Digital constant instrumentation? mentioned the book-to-bill in one in around or there book-to-bill

Yes, Jim.

one I X.XX. book-to-bill over think more a little like is the it’s

those probably X.X, are is book-to-bill the and think longer-term like little are these said it’s There, I in I about Imaging system one X.XX, a our is is more is but but as below instrumentation, high, engineered Digital that’s Defense aerospace X.XX, because program. is long-term and Electronics programs. programs

So, overall it’s about X% above X%.

don’t back was that last what’s growth of question that organic by showed measurement. and I the the while, from growth electronic in seeing that? I the and in test I’ll in business LeCroy you growth Okay, a get of queue. surprised kind recall driving

there’s Jim. Well, that, to two parts

First or is electronics partly the moved mostly introducing they’ve in than the in the has we a though I healthy, growing high business interface, other really Bluetooth, protocol of business, measurement do the mentioned position Even is new a in test interoperability And, have one but much number business, significant protocol business business multimedia oscilloscope before definition, devices, the secondly domains. protocol test business. oscilloscope business and because the between which test, products, up, LeCroy that have lot as in faster analyzers. we

LeCroy, businesses, protocol So, and a the Cloud yes, storage both so combination it’s oscilloscopes. increase in of also protocol helped our has

Congrats you. the thank Okay, quarter. on

appreciate that. lot. Thanks a I

next the [Operator Instructions] Please go CL comes King. of with question line ahead. Our Godfrey from George

good you, congratulations on… and and morning, Thank

Good morning, George.

nice morning, a very Good quarter. Robert,

Thank you.

In reported the XX% and and then just touched which quarter. up looking quarter the environmental there with this then growth second on marine, instrumentation test nice this two was measurement, you is segments, the as X%; other XX% growth at

touched touch just measurement, well? have environmental the factors on you on the can you and in the that Now test segments marine as

Of may. I start I’ll course marine maybe if first with

and the are I we XXXX year I stabilized, essentially mean what our between $XXX have call, is is businesses XXXX. As flipped of market marine have that about do XX% the in by and businesses was the And, which exploration about marine lost mentioned and - we earnings This operating that that and XX/XX, be science, and other our that and hydrography, million. energy used energy to thing then about security, production $XXX defense, XX% off-shore million, transportation.

more Now that people the we of is importantly, portfolio. consequence we much took almost consolidating up that out and also oil because XX% of the the consolidation, it’s took finishing we’ve And, production improvements so even modest had a the from and has cost facility the we flip is a exploration side and then U.K. stronger but had marine that, did a now to in as defense in we growth, business. stabilized, that’s and lot Florida, the last of of margin, year facility the businesses, significant we XX% like

or and and good monitoring, product strong of monitoring then and very growing pumps position of On there. accurate health helped across very organically and environment laboratory sub-segment, the pressure environmental and it’s liquid businesses, very, high make that very do did very have the like life chromatography programs, had in and the across growth high well in a we things but we that is because segment digit example smaller acquisition, double the the pumps, pollution And used that have growth, our also, pressure businesses various pressure we high we in lines. China, quality science really for coming we’re in businesses, air also good products

$X.X then Thank the quarter Do QX was those million tax you expect back - tax not near similar guidance, numbers? will benefit there approximately for know of if one looking $X.X go you there. the be Sue, the discrete just magnet, tax I discrete $X.X, magnitude like QX benefits in excellent. those That’s it’s looks the it this a but in benefit discreet of I somewhere question million and for at the versus ‘XX, that. to And,

at not No, all.

Not at all, okay.

of exercise that benefits have of price, we discrete creep higher mentioned have as stock going get when more X% coming We options. do maybe works earlier against our X% us. think up, course Sue the stock so share is and the we because from people that of exercises, I stock tax QX option to to some that

Got you taking it, for my thank questions.

you. Thank

is question with and ahead. next Our up a of line go Jim Ricchiuti Please Needham follow from the Company.

It larger see where be these wondering you talk of and bit activity, about sounds for again I’m in might opportunities you like maybe segments, are would you there deals? a some be tend or acquisition suggesting terms some which are smaller opportunities if attractive - and pickup broad main to some can

Obviously world’s with visible businesses and and down range start best we ultraviolet. when at look you when broadest to me is the segments have because and stronger, now stronger you there businesses from and imaging let at related to becoming the our portfolio imaging, First please. anything look infrared probably

five area acquire, is the We have make so us all look positions, there the them. nice the we we one is out the would another of product, combination going of there area and we said in our spoke already about as position we area very cover, to if to which I in we first of are the just to four are we for just areas anything was number protocols like have but environmental

smaller with look In is doing terms and EBITDA both, debt that could be in size, we net debt, the is about interested - our you $X.X be Sue would flow our about $XXX at looking at about of we are billion, it larger, if it’s million indicated, acquisition $XXX something cash million.

if two EBITDA we currently, $XXX maybe debt with that anything acquisitions, some then and years half essentially being - of if course we didn’t it. any So, could that but we down we pay capacity acquired approximately. have million capacity into that And, do

let looking do so larger would at both something and we us that of So, are those.

you. Thank helpful. that’s Okay,

much. very you Thank

And, questions no we have queue. further in

you conclude very to our much I’ll Thank Jason conference operator. now call. ask

the it. call reply everyone releases the Ryan, the are could earnings you. morning. up conclude and questions, joining All to you appreciate please give if thanks me call, on again our on if And, information this available follow Thank teledyne.com. have and us feel please Robert Thanks number the website free for our do we’d release. earnings

at December through run replay was replay. gentleman you and AM specific as today call That be available today’s X recorded for will ladies midnight. starting and at XX:XX Okay, heard

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