Teledyne Technologies (TDY) 23 Jan 192018 Q4 Earnings call transcript

Thank you, Nick, good morning, everyone. This is Jason VanWees, Executive Vice President at Teledyne. And I'd like to welcome everyone to Teledyne's fourth quarter and full year 2018 earnings release conference call. We released our earnings earlier this morning before the market opened.

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

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

quarter morning organic. per fourth our you, I of with quarter, time am were and good you fourth sales which all was thank pleased all the earnings full GAAP and everyone and Thank share records. year earnings call. sales joining for In exceptionally X.X% Jason, results, increased and Teledyne's

growth In profit experienced addition, from Earnings and vast operating points XX.X% growing of businesses and per each and the year. compared of nicely. share operating XX.X% year. XXX $X.XX increased with business our margin GAAP last defense last basis increased commercial segment in to sales was majority

of flow annual free also with and a record us million Finally, cash to lowest ratio $XXX.X in years. was leverage allows the XXXX end over four

markets, different In in cycles words, but underlying related and complementary and demand to subject and building is in allocation. consistent about balanced serving me for improvement one digress to prudent related products about capital please business a companies improvement moment. are performance; of to different balanced; Before story way volatility. a the and It customers that allow common Al reduce the of technologies, markets to story and a turning Teledyne other drivers. Pichelli, call in operations Today is continuous with continuous financial portfolio

test standard again applications softness than For example, and offset generators with strong This healthcare detectors of year-over-year in of sales instrumentation. more sales products increased industrial measurement of and decline Within measurement machine test offset within a than marine X-ray vision. related and for instruments more instrumentation, imaging and electronic digital sales strong. electronics particularly to some of environmental

in each improved. operating lines margin those of product However,

organic performance defense which declines pass now call some in and electronics Finally, Al of will will growth than I of our to sales business four offset XX.X% tough aerospace more he segments. our was on Pichelli very the markets. expected comment and commercial comparisons the

X.X% of analyzers. Instrumentation across increased Robert. but Sales you, lines, In increased electronic Good year. by sales last fourth product sales of and morning. protocol Thank measurement test Sales our range quarter of are from our led systems the Segment, strong overall, were organically. XX%

result Marine selected of universal reference, fourth across in instruments monitoring marine XX% gross measurement data in range increased prior particular or points, increased used laboratory continued the year-over-year of instruments in instruments higher storage protocols X.X% we as domain, to XX%. and full and sales life quarter Sales orders quarter, declined as well Overall, margin protocol a greater in greater were analyzers a year science sales margin as storage. and instrumentation. test largely the XXX reductions and increased growth drives X.X% XX% but data as and growth to of bus Segment increased cost generate, and domain. high environmental and speed electronic orders disk a and environmental data of operating as significant profit basis Instrumentation For or capture such result other from communications of USB, movement And serial standards the In in solid-state network analyze are sales and designed continue benefit cloud of protocols familiar increased less applications.

organic. Sales proprietary entirely fourth Segment, Imaging detectors medical significantly Digital dental x-ray and to Turning of sales increased which our was quarter X.X%, year-over-year. increased

year-over-year also addition, in for generators x-ray cancer radiotherapy. In growth achieved we robust

also grew of earlier as appreciate points XXX XX.X% lower to in We systems of part issues Segment defense quickly basis marine gain address manufacturing largely market segment Segment, programs profit MEMS X.X% a for to but Engineered of also microwave basis business operating fourth Defense In fixed I we especially to but increased, applications electronic last but as To extreme margin and engines. well weakness from balanced, increased of product cruise to space quarter. micro-electromechanical favorable particular our and prior non-operating margins sales XX.X% Systems defense as the strong operating turbine or businesses, follow sales briefly due and XX stock-based but sales majority high to also and and lithography. to growth reliability the margin fourth nuclear purchase In solely on increased is profit result basis primarily due offset declined such for that up accounting the shipments but quarter related sales, when of a increased declined fourth the with greater increased lower aviation missile Finally, sales Segment our Robert's comments. quarter increased UV strong XX priced due GAAP to of Segment, in missile across as revenue in conclude, engines. compensation sales Aerospace life by mix. appears. primarily and sales year $X.X semiconductors. points operating million want of sciences points due items devices consumables decisively portfolio partially

sites as XXXX. marine variable businesses. XX% decrease our included actions and a years, three in XX These over instrumentation in workforce in we the total the including closure permanent of example, made For the well have manufacturing sites as reductions cost X last

earnings adjusted which Finally, over totaled Sue. I throughout to turn this now cost period, the will actions none $XX of our for nearly are million. such call

full is $XX $XX.X in fourth million XXXX ended quarter XXXX. of compared We of provided by XXXX. In was the the the Robert quarter that debt Capital cash $XXX.X million quarter same of expense of and I $XX.X $XXX.X the the for $XXX.X XXXX. compared $X.X expenditures of was higher cash leases $XXX.X year million with $XXX.X cash cash compared in covered by activities activities of million the The first and Thank and same Al, compared Good cash quarter not payment. activities Stock fourth financials $XX.X is amortization you, our cash million XXXX of XXXX. the and fourth option for net discuss in with million $X.X period debt compensation $XXX.X for in Al. the million XXXX quarter outlook. quarter, to of will was I’ll was the income XX.X%. morning, plus period of quarter additional from of for with and in flow in debt by that operating XXXX flow capital impact million fourth offset ratio quarter some expense for fourth fourth were then, to operating tax compared fourth from to million million net same of with million income less the of everyone. XXXX. the higher Free the capital in reflected $XXX.X operating first quarter period flow quarter million of discuss million the Depreciation expenditures operating capital

In with of charges fourth also consolidation included quarter purchase XXXX $X.X decrease the result million as of million year's provisional the compared million pre-tax provisional XXXX, release, the eXv severance Tax of earnings a resulting the XXXX charges of fourth in The Act noted its the of related by $X.X of $X.X the Act transaction. Job a accounting XXXX finalized and charge. Tax of facility Act. $X.X of to costs quarter the company in million million included $X.X gain offset assessment last the Cuts of and of quarter As Tax similar the fourth to or

the before that GAAP basis believes XXXX currently outlook quarter full $X.XX earnings earnings of discrete management $X.XX the is GAAP And our in is The increase expected year first full share. in outlook, XXX XX.X% a year per our the to to items estimated share of XXXX. per be tax point to to range $X.XX per to will rate $X.XX. compared XXXX, for share be Turning XXXX

significantly in XXXX. call pass compared In the to XXXX I now with expect less items Robert. addition, discrete tax currently back will we

we'd Nick, to take Sue. like you, now from Thank questions the audience.

If question-and-answer ahead. you're go period, proceed please the ready to with

Instructions] ahead. [Operator We Greg from our will you. go first Thank go question, it's Please to with Jefferies. Konrad

expectations morning. Good just your are? little the was maybe you just and give basis could XXXX bit I for color what hoping a on segment of growth a organic expectations maybe around if

very much This you Robert. to is you. morning good Thank and

-- projecting said October, three lower in be organic with for growth I and about between XXXX. we'd First, ago, be X%. said We're in start what now let said me than I overall X.X% In X%. October. I it'd It's a months little the

anticipated slight cetera. part and that as headwinds, put of shut of because for et So a the overall growth decrease currency the tariffs, down, China governments is bucket

below strong to measurement dental in and imaging medical X%. while and X.X%. revenues to In thing just growth. order about pickup are We'll organic growth Let about lower. some of X.X% little Marine will marine, go enjoying pick X.X%, X%. instruments, in and environmental the expect we very We think other segments. little but test And it'll so me we the we have now in segment, Instruments in have be Digital our up in the of a a products.

We system, vision have machine the vision some system. headwinds in

that to X% So And probably should it. moderation and a expect in we'll of be growth I defense the continue overall, from growth some of to segment the make And we up more about aerospace, in to engineered X%. for year order Defense, be X%. next Aerospace think to this combined little think than see systems, headwind we’ll two would X.X%. the above then of have we revenue

all those to add you comes it X.X%. If of about up

X%. range and the So said between X.X% I

I I Thank the now in around much was maybe nice throughout you. harp mean thoughts digital mean on That's XXXX? how little your you year just year. helpful. the more margins not volatile in at instrumentation, just thoughts too 'XX. I your margins a around mean just guidance, pickup imaging bit there exited And in looking a to I and then,

think, some this year overall, I as margins GAAP up really we if some to mentioned. margin, nice go picked because moderate we I

perspective, points because benefit have taxes the going improvement I tax XX we margin. guidance in think segment GAAP XXX will we point margin in basis margin line, also XX. based defense the we're benefit. margins And some and it'd expect be have flat, bit. about will about think a that Sue's points taxes imaging little slightly we in XXX lower is some operating right XX system this other as in be on XX much some slightly tax to I the instruments to will But items. expect up all aerospace headwinds and and basis a to We not primarily have do overall conclude, below XX foreign and discrete Digital going now, will forward, our improve between R&D we're we be points. basis operating to have basis at going To and by down, balance from in XX anticipate between go of engineered points fact up that less

remains That's seeing there helpful. know the Defense had mean past, I one you're And is the in me, EPA, or mentioned Department I I last shutdown? exposure, you. other maybe any Is mean open, that, then, the shutdown. I government Thank for impact mean from just you’ve you just know I

now. between Right what's would some if and a have. happening of a don't we're that but long see disputes be trade programs our this the to that time get would that, obviously having an on being We I goes not renewals and for little cautious impact QX, affected. with said we

cautious point. we're a So little at being this

Thank you.

Thank you.

Company. We line to of & Ricchiuti now Jim Instructions] with will go [Operator Needham the

Hi. Good morning.

for revenue as of anticipate Just slower progresses growth, just the growth stronger little headwinds year a given guidance you alluded to? given starting the do full the some year off you

Yes.

I and quarter's continuous I than revenue in at the earnings, back just in revenue. the going back that you have improvement to our second. of first, and in Most if I in and think earnings and been go we've first of lower both Jim looked a noticed had continuous that part back time, went earnings had we've is quarter improvement the earnings every XXXX because in

for the how, up add anyways. up that QX the to to this X.X% X.XX quarter-over-quarter the you go point we good things I we should begin we X% for earnings to as sitting if our our at anticipating would if and So X.XX earnings and think is it I can a anticipate are number guidance to But up revenues that is where anyway. growth earnings. think disputes if are, you go That's turn trade grow up diminish, earnings conclude

in it. then, Got quarter. And fairly increase marine instrumentation, respect bookings significant to the in with

begun assume to we the say? comparisons that that in that fair easier should get So business. things And of part certainly to Is have this finally the turn year.

Yes. that. It let is. I expand will Al

Jim. morning, Good

absolutely right. if X.XX year, bill in look at ratio You're the of ways. we matter, no at -- it of that bookings was look look you book the a we different X.XX, for at to order in QX, book our the entire And terms bill all couple situation but space for marine just is to and we're if

probably that's a year exploration We seismic equipment think the while. a there so all, of First or our for for there away. been but quite is need space, another replacement, has

that side, part the And some are there defense come and that areas, us we provide on as well underwater healthy be for military autonomous be pretty offshore seems a sales at our and to be terms and side, now, generating on other other activity couple content and of that. program. then, where so engineered the done probably growing like broad And good vehicles is to large of that think in to and the XX% those production when gives growth Virginia to in side are areas seem of that bit the probably Likewise, have doing projects think from that infrastructure, have so class actually that we we're think all you to 'XX a The we security could using in we just seeing submarine for for then, we next much submarine those On that's are and areas on going X% year we relatively be as as in a late these a about but quite the upside 'XX. and each that area that and have year. flat looking know positive in-house. there space of pretty orders equipment we So vehicles be suite science, an is And see a coming. application. that of

and we you So of the water about. sort talked an Marine oil and some see that parts gas Robert a that historical flattish, see the do of and though bit remaining improvements deep of hence little upside

on bill you for maybe alluded bill you. of this segments. in wonder to to broadly Al, the can business, speaking give of the to I part Thank the up you the book And quarter. if just us any for Sure. book color some

I Sure, that do can Sure. Jim.

We that and about X.XX, were I of million Our and through Marine pretty some, a the by you as a quarter if about book for had added the we orders for that mentioned math X.XX. company. the segment year to bill means strong backlog the the go input to $XXX of

and book was an burn under [ph] was [EMEA] our to centered and I one you the as [indiscernible] test cycle environmental that go and about measurement think measurement and around a which know and And one it's environment a that's you just short hair there businesses. our So one. business our test

X.XX. now. doesn't change book from below to too imaging, to In bill that QX bit period talking little the So I'm a about we again, a have And period. much digital

QX where year, for number sort in multi-year orders the and are these in the XX As Keeping a point our and space mind programs come. defense aerospace that the is a in of of programs. of X.XX majority

had four year. QX to for keeping and a at on out the half say orders year the Engineered go an down that's are were to X.XX, one remorse orders then, electronics, probably you X.XX. book I has as the the Systems years. of that the programs but move and or very think Systems are one the the engineered three in bit look defense the else, in a in I'd large And But for orders so year. extra fact, we have but aerospace fairly QX X.XX the you total bill to are from to I lumpy healthy orders little for mind your think quarter of X.XX, programs orders for In month next when will And Engineered one

as you have So we year bill QX, helps. if in far up a as that and add to all for the Hope that book X.XX X.XX.

does It last you. help. Thank just And me. question for

just potentially that get wondering pending with to the to alluded You does and acquisition, I'm the impact from shutdown delayed potentially there. things some respect

submitted government we've We right of Yes, I'll at Jim. we're filing. year. the beginning there did HSR nevertheless, take going isn't the that affected, first one the process, our the things that Two through that programs

have this unpredictable. point and at asking an it's it examiner We questions. that's looking But, at

to to But close We affected that our with part be in even get be though one us. could engaged that's so QX. transactions expect able far to the seems examiners very

So we're that. very pleased with

pipeline other over how Robert, of Okay. out the acquisitions the balance year? the is looking for

charge bad. I'll not you that. It's

want back because to debt net our to million. Let and me to I because EBITDA, of mention go say getting about $XXX down debt net

going EBITDA combined XXX. get to our this Now to is up XXX year to

So XXX debt XXX end of million going close it a we net we're maybe the do to or to million. rid or anything, our we that don't year net have by debt, get

a of long year muscle So time. we than seen more a lot have financial this I've in

I have the in have $X.X capability. -- of the to think something we of order something 'XX of billion $X.X order will of we billion

being for an as that us. opportunity put me let So

and of Having that, disciplined We who going are all that continue be large to medium are large. both acquisitions, others of in fairly we small for at size, said looking are process. less

the get does balance keeping at of to not We have of whack. looking -- out our balance keep the businesses

Having we're think I in the and one if past. together, all of goes that takes earnings aggressive direction too it going company's revenue more one that probably the much. market little than to be a put So in down,

Appreciate you. Thank good. it. Very

you. Thank

Thank in further you. there At queue. the no this are time, questions

much now I call. ask will VanWees very you operator. Jason Thank conclude the to

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

If it in Nick to call. my replay thank I provide a details would again the release, appreciate audience. the to if the and follow call you you free are have everyone. numbers up could earnings questions, feel please do conclude you and conference

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