Teledyne Technologies (TDY) 6 May 182018 Q1 Earnings call transcript

Ladies and gentlemen, thank you for your patience and standing by. Welcome to Teledyne's First Quarter Earnings Call. [Operator Instructions].

Just a brief reminder, today's conference is being recorded. And I'd now like to turn the conference over to Jason VanWees.

everyone. morning, Good VanWees, Teledyne. Jason President, and Strategy This Senior at M&A is Vice And to welcome XXXX to I like would everyone Conference Earnings Call. Teledyne's Release Quarter First morning. We earlier our this released earnings

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

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

Here is Robert.

Jason, and Thank increased of share an record per earnings and XXXX including for sales first growth sales, XX.X%, record quarter. We with organic We outstanding any Total quarter. began operating X.X%. achieved you, margin record morning, everyone. good

again, with XX.X% Digital segment exceptionally increasing performed Our from XX.X% organically Imaging and last sales well overall year.

continued Within execution. strong and growth in the automation, from benefit new we Digital launches product machine along Imaging, industry-wide to vision with and factory

of Electronics our and is segment, complementary lower-than-normal applications, excellent digital segments in strong largest all in the the multiyear Digital in semiconductor-based from to our which still book-to-bill X.XX achieved Defense a segment Sales using image year-over-year of from among segment, However, were metal-oxide segments. Even Aerospace orders, with contributed outstanding well-balanced our total Notwithstanding X.X. X-ray for each excluding segments. resolution organic our overall that to Every growth detectors Imaging the space ranging all results segment X.XX CMOS, and produced our for our performance our within program exceeded X-ray ratio our radiation. company. X.XX book-to-bill overall X of for medical dental was increased and all-time record also organically

on year. X.X% performance marine our first sales, of by sales In segments. X.X% instruments overall last lower of increased from energy quarter timing of systems. primarily sonar declined Now of government sensors our the offset Sales U.S. sales Instrumentation of and reflected exploration I'll comment business for higher sales partially unfavorable segment, and

and XX%, increased the of defense sales energy and However, test both increased Sales marine of X.X%, the laboratory sales subsea instruments XX.X% monitoring offshore of we overall outlook and and the measurement quarter. operating Orders measurement particularly continued -- analyzers United certain States. declined slightly test from with be profit for instrumentation profit in consolidation associated and environmental increased organically. to United in and both compared sales very Kingdom Segment to China. by as instrumentation, systems electronic growth operating year. Nevertheless, the as environmental well to instrumentation our pollution to last continued XX.X% and increased and costs to strong part, domain, a of largely protocol marine orders in facilities science In improve. and electronic to exceeded for life the result as relocation first due sales believe continues the in of

Turning segment. to Digital the Imaging

XX.X%. as XX.X%, and sales quarter I organic increased indicated, First growth was

employees, And strong cameras, of lines Furthermore, eXv finally, the last And infrared growth eXv MEMS from and year. continue microelectromechanical celebrated technologies Teledyne. sales basis We life revenue of or I performance the and industrial grew segment machine customers of that that eXv. the vision the contributors for shareholders with added products, of and application both for of GAAP more not pleased to Teledyne all people, year XXX semiconductor our detectors increase. be strong shipments to margin addition science to anniversary recently acquisition points commercial increased our for has were processing could financial product handheld to devices, we systems, X-ray also highlight detectors applications X the and In profit. want and and to to government considerably. operating

charges, from very in part Commercial XXXX the segment, and XXX tough excluding acquisition, XX.X%. quarter still but by growth While -- XX slightly, underlying the Aerospace given operating points. increased first sales comparisons. to of first XXXX contribution some aftermarket quarter increased Defense some was charges margin, basis eXv related strong also to sales impacted due of aerospace the In XX.X%, eXv the have organic these declined Electronics would

quarter However, electronics a by points greater due largely as revenue number defense manufacturing of margin product sales to to significantly primarily increased sales basis across last well lines. as and interconnect driven year Segment greater X.X%, marine segment, defense increased due XXX Systems microwave, first operating of to the programs. margins. increased service sales Engineered versus In greater XX.X%, improved

also fixed-price deliveries. accounting of margin the engine enjoyed a new rules. I related missile Operating lower turbine primarily result sales briefly We should to ballistic as pension slightly, increased defense. on declined comment

splitting operation; or line our operations is and now which guidance in requires service for components, pension net retirement statement. separate below income in New cost on expense, cost and which two now the our income is expense included income, into a benefit

accounting has been mentioned remains our historical most, I and pension the impacts the here where especially Systems new closed Engineered the businesses this legacy to Our it XXX points. since approximately new rules participants But margins by affect segment, since overfunded XXXX. basis

and offer after in in I historical included businesses our XXXX outlook. For conclude want release. first comments, my change our some reference, accounting to the we perspective and earnings our To have before data

about progressive talked of a of our For years, the number portfolio. I've business transformation

exited have aircraft such we First, businesses commoditized and as piston engines. liability-prone

scale built portfolio. imaging, we high-technology XX% now in to digital acquisitions, bolt-on Second, comprise instruments of and and larger especially which have our

and both have both are operationally. management, demonstrated Fourth, portfolio, and systems have continuing pursue finally, businesses, And while rapidly we we also to a our our to culture. and we units, with company, lean a financially pleased large. acquired Third, corporate we as ERP successfully our are small current business ability by acquisitions, evidenced integrated matured as strong consolidated business and operations integrate

Our margins improving shifted improving and products our streamlining of to and customers by have profitable and on our focusing and now all largest most efforts processes. business

call we I X% Lastly, year. be compared in growth to the February now the will currently I believe of turn organic in revenue to stated Sue. XXXX that approximately this X% the over will that

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

after the one quarter XXXX XXXX was completing compensation Stock ago. compared million first at XXXX X.Xx with first X.Xx in XXXX. end leverage was quarter quarter the to million first the the X.Xx of fourth end the ratio eXv acquisition and compared $X.X in option of of of of the $X.X of year expense Our at the quarter immediately

$XX.X recorded segment, included million recorded first was expense costs to was and in eXv of a $X.X the interest million as pretax $X.X the charges million Imaging of approximately of to in share. the in noted the $X.XX $XX.X million to recorded earnings transaction, As was $X.X recorded which acquisition expense, release, other corporate or was XXXX Digital million quarter related expense

I year outlook. be our Management the in GAAP currently $X.XX to believes the in GAAP to outlook full is to our per earnings $X.XX Turning earnings period. our will in back now to $X.XX outlook XXXX XX.X% compared to XXXX, are per share And to we XXXX XXXX year the $X.XX -- that before full discrete quarter which for expected of items, of The per share. share range second tax is lower $X.XX. the pass be estimated in Robert. prior than $X.XX prior currently to rate call of will

like take to would your We Sue. now you, questions. Thank

you with Justin, please if ready the are to go questions ahead. and proceed answers,

[Operator Instructions].

have we the Jefferies. Konrad of of line First, Greg

has it, our It modeling it how eXv too. exceeded expectations. And your at seems mean, least we're like I know, I exceeded expectations,

of some comparison, think, we growth trying a maybe mean, think have, that what year contribution how so organic year eXv on I'm last grew I I has only quarter and just business year to this Just can get half been. about we given much a ago? the then

little X%, more. would a I say, Greg, maybe about

X% last year or this quarter?

It little the -- this bit about a from of contributed, was $XX more to Greg, a I year. it XX.X% million revenues, in would our say year, XXXX. total about this the And is which overall QX. little

something the to And But how the do is I you sense. think for makes then growth when be growth rest target, organic your every to X% expect out understand segments, going organic the about you lifted of you're quarter. and year? play to you probably going just not That

just Well, let can. that the best me I go through

that it of little its because marine out in we think, had going better be kind a forward. segment, first way Instruments shrinkage I think will we I think in would quarter. in the But the work

revenue primarily with and Greg, can't our X.X%, will it's part I'm the markets. QX, obviously defense maybe and organic probably shrink is the But bit portfolio just X%. cautious this And X%, X%. our about giving relatively you. of So Aerospace but flat, aerospace short-cycle about little it so a Systems, marine in would did of total be total other would will like These by businesses. it be Engineered what well. be part we Defense, saying because Digital us organic numbers about predict little X.X%. Imaging up to are growth, should for far, happen preface X%. half over pretty would the versus a stay a are various over I over maybe and should increase, we X.X% should Instruments worked

it And a obviously, one for great And last quarter. that. just appreciate guess I was I me.

couple a development levels. any insight the have the fiscal to aligned budget about programs, I'm defense? you of year budget, where With of 'XX on how your I mean, maybe just to funding kind but is focus think

Yes.

really I for think good the us. budget been has

XX.X% the to Defense we the effect overall grew most precise. First, Electronics. be But about have has budget seen XX%, been our in positive where

Electronics grew XX% year-over-year. about Our Defense

XX.X% in, about of Teledyne segment, that. also, for Missile business which good. a over is continue that, Systems Virginia-class that's helps does submarine where we microwave Of is which what very change businesses, are two X% a increase our businesses Engineering, that's warfare, most lot reason in us work. in course, in do of Engineering we grown about budget has healthy got One is which a electronic other manufacturing. of where contributed because year. And going And as Defense of the in our a up, of as been a to our lot We've is per have well that's things. the two Brown really this and is program there products. for significant eXv part our But our And interconnect

for government have get healthy to about So to numbers the the I saying, to conclude the by being out. us. because awards must out, budget able able overall, there some budget -- came would are for be increases I say get defense late, been the issues the in to very

lagging are say contracts XX% So they're closer far. to I'd the and X%. so the awards

of & Next, Needham Jim of the Ricchiuti line we have Company.

Digital little Imaging good businesses? Robert, from organic you've balance X-ray Is MEMS assume of a I'm strong vision as coming that being of growth the you just that you got growth over and as the comparisons a the that as see the it to balance surprised mainly kind segment in machine industrial the the year I over continuing detector the or year? see the of area, ahead be tougher and area is. would

Jim. Thanks,

million. is Of or of ground Imaging on now million about or our than displays. about $XX is Digital less Let vision machine million, me just about that, note in flat larger first, $XXX rate picture, that a panel X% $XXX right is

in bit of that a only there's you less Imaging, look know, of the about Teledyne you and business, at part When a flat as business, panel As is of little Digital concern whole. Imaging budget the Digital of than X% overall displays. X.X% that

down, really a barcode So us. if in for down good and change little, enjoying goes things that going goes not cameras of it's up for are identification. lot IDs, Where we is to sensors, uplift a

We a very program. digital also have ophthalmology strong

We have -- where tomography. coherence also for provide -- we cameras do optical

And solar, We a also we have strong defense recycling course, of have other food other have some some automation. program -- and we and sensors. things space. in printing, we factory in and play in And

like to projecting may the in Digital but well-distributed -- Thousand stuff imaging going little among well right are in as us. all have things industries very in look And eXv and the our DALSA directly of many Imaging all as we is Oaks. for much portfolio with from of lot portfolio as So Teledyne. across people all, here course, in things And FPD, for we the is a that integrating, not are some a affect as that's because business headwind of what all programs anticipate we're

helpful. that's Okay,

the business. the costs could the facilities costs, Just Instrumentation size operating shifting costs. of I unusual you the if that relocation wonder to impacted income, some

-- a have it in makes shipping I to I some of moving business. just It's as large operation, I in it's in we're -- area, from It's the indicated, we certify, the had the systems, because small very existing we've U.K. think, one marine factories. because systems delays Florida. mean, an to their

about that. $X.X from taken $X million, hit We million have

why We continuation revenue up behind of will in our should of little through margins that's expect I think that improve marine I we expect as both us. by QX. will And QX, the year. said in end be our a and that I business, But move that go the

Okay. in -- line? top wondering, on benefits currency currency was the And there was from any quarter the

It was very minor.

Okay.

last Okay. question And for me.

front, Just I'm more wondering out the eXvs M&A on there? any

had or eXv, wish. maybe exactly are Everything few I No, not things part some, are there of they looking moderating. expectations. market of have looking are as but slightly, rearview kind very eXv down we Teledyne. unique. one fit in are and with things the current wish. at, a going you was think mirror because I even know, There I kind everybody's another high of But the like very into

have should opportunities. So we some

Instructions]. [Operator

Next Godfrey the CLK. have we line George of of

of being the like, you number and and a is the what in strong. Imaging, products product It's highlighted there Is older Digital You the market it applications devices? replacing those used gaining equipment? Are share? what new growth applications Are new displaced? being organic and is really is

Thank you.

scan First, scale, broader line on a been we've historically, in devices.

We area are scan. market the now moving of into larger

mid-market us, products. new have nice series a also is which Second, for of a whole we

recent new and eXv introductions, which both optical announcements indicated, As product as I and in gold mentioned the won as one before. scan well Digital in medal DALSA a awards Show, camera line the tomography silver our coherence in camera, recent Imaging have of both at the

other we've that in our that facilities, George, detectors enough X-ray we and business world, The Eindhoven. is, is have capacity medical fast mentioned, most dental well had doing probably Waterloo production applications. and X in Eindhoven one both areas advanced really for the as our detector in laboratories X-rays, growing the first, X-ray because are that, one for in we us in so That to have introduced increase I can

gain -- microelectromechanical capacity. we as increased had have MEMS, have increase microelectromechanical relays mentioned, to there, Second, we -- systems, the a I

more CapEx as again, demand vision our as partly there increased -- life accommodate some bit. we're applications. machine well order as to to You square a science; make for both as by XXX saw having life -- little products very increased X,XXX capacity in applications, rooms That's feet increase applications clean has from we for science the interesting well semiconductor with

products machine new across are sensors, So that, into products distribution in the It cancer also think from for patients. revenue RF of in said all of from going products that to growth increased MEMS our new having our ranges I and vision products. is radiotherapy

portfolio, broad far. cylinders so be a on and seems it's all So it to hitting

And for $XX estimate year? great. this for a for million CapEx question That's Is reasonable Sue. a

between thinking million, we're $XX Yes, $XX million.

at And have no queue. we in this time, the actually further questions

Thank you to call. to very Justin. conclude much, ask I'm going conference Jason our VanWees

joining for and Robert, this us thanks, Thanks, everyone, morning.

to follow-up at on feel do please the number call questions, free the me release. have earnings you If

the appreciate again. Justin, would call if we the Thanks information, conclude you it. provide and could replay

Certainly. Thank you.

can today. does available We replay today's using internationally, participation. and dialing conclude very XXXXXX. gentlemen, conference you're thank by event all thank Again, of the using for the dialing XXX-XXX-XXXX much you that your very and of AT&T's same dialing replay XXX-XXX-XXXX if same participation ladies do for for your Executive be XXXXXX. for access reach recorded by The of you the and using and will service. Alternatively, of much the Teleconference we code do So code you access you

may You disconnect. now