Teledyne Technologies (TDY) 22 Jan 202019 Q4 Earnings call transcript

Ladies and gentlemen, thank you for standing by. Welcome to the Teledyne fourth quarter earnings release conference call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. Instructions will be given at that time. Instructions]. [Operator

this recorded. reminder, is conference a being As

I to go your like to ahead. conference over turn the host would now Jason VanWees. Please

Vice released quarter opened. and Thank Jason year the XXXX to everyone. market morning conference full earlier everyone President call. this release Executive before We welcome fourth you. want earnings and Teledyne's This to earnings I our Good VanWees, is morning

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

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

Here is Robert.

call. and Thank joining earnings for morning you everyone thank our Jason good and you

cash sales, by and quarter, free earnings year full earnings, the margin operating record flow sales, all-time GAAP measures For and year. free cash second all-time a we was achieved flow. any per consecutive record records. Likewise, share XXXX Each were of

the headwinds, X%, X.X% full XX.X% for sales including year to Fourth growth about currency increased full exceeded Organic and XXXX. X% in periods about quarter X% for and respectively. some year modest QX headwind both also

GAAP under basis both the points. fourth year, operating expanded margin just for XXX In quarter and addition, full

the an $X.XX compared per share of first year. quarter earnings XX.X% exceeding $X Fourth time, were to last increase for

we our in compound we flow. continuing have strategy on and capital disciplined for earnings our are proven growth of deployment margin improvement, cash increased emphasis While

LeCroy Technology, we electronic solid complementary of announced test, In and is and of hardware This devices provide company focused of our Teledyne storage month, on the media. this the on hardware earlier OakGate new for the such state storage of devices a the XXXX, data and hyperscale of we protocol storage third design use used software deployed acquisition cloud bolt-on allows validation acquisitions complete acquisition to a from Teledyne performance analysis $XXX set in and and operating million software networks. to

that of instrumentation to sixth businesses our to in continues orders our begin in sales, from portfolio continues technologies different in microelectromechanical growth offset systems digital XXXX exceeded vision benefit certain as common serving machine see expected with certain recover industry. Teledyne imaging, defense balanced complementary with also to or Marine In markets. a strength OEM with avionics. the we modest in sales growing having sales to of high-growth declines markets We expect to such commercial the quarter. and markets for semiconductor recovery like consecutive MEMS continued but

Given projecting growth. this the and measurement digit are our electronic only at and of instrumentation businesses, single GDP like environmental cycle point test low short nature we organic

leverage quarter-end a of opportunities. are to acquisition with continuing ratio pursue strong exceptionally remains and sheet balance X.Xx our Finally, we

amortization, Before results other with morning or charges. this restructuring turning I purchase want the call to accounting, reported on all a adjustments emphasize GAAP to of our are no that Al, for charges, financial compensation, basis, acquisition stock

our four business Al will on comment now segments. the of performance

with closed from overall backlog of increased And in fourth organically quarter year. our since you XXXX. the XX.X% XX.X% instrumentation also last marine XXXX sales the we Robert. year-end highest instrumentation Thank segment, In quarter. Sales increased

In addition, improved operating profit significantly.

recent and of acquisition increased flame result In as the environmental business. gas detection domain, a sales our XX.X% the of

sales instrumentation and laboratory selected of sales gas process offset organic greater were instruments. pollution control lower addition, In analyzers of by

but XXXX, increased systems measurement level of given an X.X% decreased Sales of and tough test electronic to year-over-year sequentially comparison. especially highest the

full increased profit operating marine with and basis increased the in XX.X% margins increased points X% the margin year, quarter and segment and For XXX instrumentation. measurement instrumentation Overall, increasing organically. sales for test

acquisition within flame accounting, the and margins related gas and increased instrumentation. also detection environmental purchase the Excluding

in in the imaging visible to businesses sales light quarter applications. strong Fourth increased year-over-year. some Turning our detectors significantly expected medical in The and Asia. consumer offset our which of Sales geospatial markets, Sales space factory infrared grew defense proprietary machine and dental electronics than increased segment. advanced and vision also serves nicely industrial the again these especially MEMS business portion and growth detectors systems of as sensor digital sales for and X-ray XX.X%. did devices of generally automation of more declines

However, products inspection a recent systems. these increased GAAP basis and the recovery result increase increased points sales as semiconductor-related given margin profit operating some increased in did sales generally segment XXX of volume. XX.X% sequentially of

partially product sales In decreased quarter X.X% growth defense businesses, Segment fourth the aerospace and segment, defense electronics. from avionics. basis offset operating mix to across aerospace of OEM sales lower primarily to commercial operating XX.X%. electronics differences in our defense sales by margin increased electronics lower of electronic points primarily majority of margin resulted XXX due strong The and

systems turbine by operating and and from flat to missile sales In profit the sales revenue greater fourth segment, more was Segment defense decreased manufacturing engineered year-to-year. related energy space offset engines, and with programs, programs and margin energy quarter electronic lower X.X% systems. than

Sue, XXXX to want our to turning outlook. offer some additional I regarding Before commentary

believe the XX total be revenue the full points Robert XXXX year that by growth earlier, will organic X.X%. we in to Given raised

will $XXX translates billion $X.XX This In full year detection, revenue. so revenue or OakGate another scientific contribution incremental of total for flame XXXX. of and billion $X.XX from approximately to addition, the camera, to the million acquisition and gas Micralyne add

now to will call Sue. over turn the I

everyone. and morning will the XXXX discuss by I our then for first and good I some discuss not and year Al quarter Al you financials and Robert Thank additional first full covered outlook. quarter will

by of the fourth $XXX.X the million improved for operating operating flow from flow from provided working cash cash $XXX.X capital management. XXXX flow In reflected XXXX. fourth of in and record of period higher of with activities million, the activities was recent quarter, the cash quarter acquisitions impact same The cash income, operating compared

XXXX. flow, that cash with in period fourth quarters were the compared less capital $XXX in was the in quarter XXXX. expense million operating both to XXXX, Capital $XX.X of and from activities $XX.X fourth expenditures, million million compared in Free for of expenditures Depreciation same fourth cash $XXX.X quarter XXXX. amortization $XX.X million was and XXXX of the the million is

debt We was quarter XX.X%. ended less of cash XXXX Stock fourth option the of the quarter ratio capital million that debt, for $XXX.X the million with million debt in million net compared XXXX. in $XXX.X $XXX.X million is with quarter to of net expense $X.X $X.X of compensation fourth of of

estimated a percentage $XX.XX discrete XXX year the point Turning The full part XXXX year GAAP items to basis range XXXX, per first excluding GAAP of share be the to our of to XXXX, $XX.XX. due earnings to in tax increase tax the in earnings outlook share quarter share full be per capital year that rate compared outlook. $X.XX Management in XXXX to XX.X%, our is benefits to income. of for to full $X.XX R&D will is currently believes and expected per less

less significantly discrete In currently we with expect items XXXX addition, XXXX. compared in

Robert. call back pass to will now the I

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

Instructions]. [Operator

the go from of first question Please line comes Andrew ahead. Your Buscaglia.

my for Thanks question. guys. taking Hi

Andrew. Good morning

morning. little you into Good more hoping bit marine. could I was dig a

that you then I So rebounding X%, now finally into vision can second ramp. what next here, will you machine have than like X.X%. you little quarter about, rebounding said a think And growth think, looks your beginning organic the that you are year? higher How a I bit marine rate given on also is guidance of your got of I the would you sustainable believe would here, got potentially growth be X%? talk

what's about So it that's can talk or you it weighing weighing how down? down

Sure Andrew.

marine. me start with Let

think marine and production We with significant hovered The prices $XX It's the a were good brent in between about ended X.X $XX profitable I is run. for orders been oil a $XX. of in lot deepwater the of book-to-bill. year this below and terms our year.

So have in XXXX that in in X% seeing oil seismic as activities oil revenues long as about term our the are would versus range of we in XXXX. for production well think We X.X% both marine increased improvements exploration contract.

part so. This your or continuing than question, the about year, is of which second Now, why growth we X% less with achieved X.X%. we organic have

between or which about X% that about, million. is would and guess by we as the We $XX we our of are over million effect affected expect That's are MAX. of We revenues projecting anticipated $XX revenues X% best because now, That's have that million, you much by that X.X% next to and down as our primarily be for delays year. revenue right equivalent impacts very would our familiar about with It million. $XX X%. that maybe XXX $XX

important that going in better aerospace did given the do flat to that Having portfolio that in businesses year-over-year of taking and said even that, last note think I to segment, to hit balanced because be we they defense revenue expect this the year. our our because revenue we defense are are it's year much than

it it up question your is MAX. by again. driven answer will the comes into So production, When primarily to pick we back

have expectation little got just helpful. What's you seems That's uptick for quarter you of just the a to, comment, good said you got could semi markets I in here. moving Yes. mean, or commentary vision XXXX? markets. And those too, your you out machine maybe have higher sequentially

So guys thinking? what you are

the machine to that an up well grow Micralyne, think think acquisition for last from the as vision year probably that sci-cam some as year, semi. cetera. but we we get will et the we will also We now, made pick organically in acquisition, X.X%, Right we

imaging really I business machine area X.X%, X-ray modestly. done which our The in Where will about million billion, includes $X.XXX over will X.X%. is would the we us whole vision is digital X%, we $XXX year help as maybe I imaging our about $X.X recovering mean increase $X.XXX what have think that well is be billion. from machine sales and billion, and vision the will overall healthcare areas in those the that digital well. this to I think was think MEMS

we so positive machine vision. are about And

Of up in flat-panel more displays, the course, will if the business especially picks we do better. then

Thanks it. Got for All color. the right.

you. Thank

from ahead. go comes Joe of the Giordano. line Please question next Your

Hi guys. morning. Good

Good Joe. morning

Hi Robert.

bit color in bunch margins? and margins the have maybe by You dilutive a little about little we answered it quarter can how you was questions of dilutive And segment much M&A get do talk there. can and margins into the a a we on how maybe But just XXXX my there?

can and it give margins to by relate XXXX. if first, I your I segment may, Yes.

as that XX good XXXX. now over points much in because would up XX.X%. We Let had think margin And it Instrumentation was me will start of XXX again end basis it full year basis for up about that about instrumentation. go Right with really think points. about us XX.X%. XXXX we improved as

to And year-over-year moving and were think digital was to basis are margin we imaging. was some XX points. at margins XXXX perhaps imaging much going improvement as there, get XX.X%. flat as Digital We XXXX XX.X%

in We XXX margins think and because defense, margins Aerospace high and going are flat. already defense for the because revenue, XX.X%, will we though margins the improve systems. as aerospace the don't are mentioned, make pretty and stay engineered up I from will the even at but defense MAX. to We think also of the headwinds primarily

margins will remain engineered about And think we then X.X%. systems,

be that we will and about the the points. increase or about points XX overall, segments, company basis overall will the XX% in think basis the as whole, a XX So it margins

on bought, the the they be points may acquisitions basis is you expenses and probable scientific bought our added gas acquisition from from question cameras Right are XM but the dilution dilution Micralyne after about Regarding we about accretion in The now, a maybe I they think business would not because of in forward asked that we was very acquiring and which QX. dilutive. early diluted was accretive. they them, flat. will have the Most while we we Roper XX in acquisitions. of going the we think which flame, dilution,

about talking about X.X% That's I wanted were you very sure up of XXXX. think What earlier I I confusing the wasn't energy to marine clarify, make there. the in you component just oil said want and gas, I helpful. about to just which marine specifically? things

Yes.

Let me point that out. just

the we marine think which This a oil was I picture. about the million, with at let over gas, XXXX. in improvement start X.X% me year first ended $XXX and big

defense and up million the of us. $XXX has from $XXX the do think to present the that to rest or million. Our to million, present other XXXX million. about and X.X% go our is plans increase a And that will security healthy anticipation we $XXX increase will oil marine think was gas in that, that million to for will Of that $XXX and with $XXX which and we things,

and it balanced businesses, especially put in programs, other a good have area. we to So oil the submarine especially is X.X% gas in between where the and really nutshell, do defense the

last for maybe So me.

the in that the what's and On been great XXXX? new business big new guidance customers the digital thoughts growth and in embedded what's of And around on outlook And has pacing with kind healthcare what's new current surgery for there? part customers guys imaging, and of for like you healthcare in and field discussions in your mammography?

see We now. years, be now. had could really a going as had had extraoral because lot good as OEMs healthcare don't new any the it robust but have up little intraoral, see had it we but happen a had are to not we we don't OEMs to think going right good mammography. XXXX in we we and of XXXX surgery, growth sign we prior we new right In in in It we is

So going increase it's we million year-over-year. relatively think flat, another $XX maybe

$XXX think I year about million. it last was

We are business. this or it's million a healthy about $XXX year. projecting But so

up-market to with our trying move also products. are of We some

year to able we closer So as improvement, especially project be I OEMs would XXXX. progresses, other in mammography as the to think we and move

Good. Thanks very much.

you. Thank

time, questions. at Instructions]. this And there further no are [Operator

much, call. do very you. thank Greg. the like would Well, to conclude Jason you to is I What ask Thank conference

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

of the news appreciate me feel are certainly please would course the the releases provide Thanks release conclude If website. Greg, free call on on available audience have number you our our details conference it. follow-up the and do if you earnings replay again. questions, call please please, to and we at for the

you. a.m. conference XX. replay XX:XX Pacific for February Ladies Thank time gentlemen, and will today this through after be available

again, entering access AT&T code and with X-XXX-XXX-XXXX access does the XXXXXXX. any today. conclude AT&T the you System code That XXXXXXX. for by participants using access participation for Those your once dialing are may time and dial or XXX-XXX-XXXX. XXX-XXX-XXXX You International Replay at Executive TeleConference. X-XXX-XXX-XXXX numbers, conference your the Thank for

now disconnect. may You