Teledyne Technologies (TDY) 22 Apr 202020 Q1 Earnings call transcript

Ladies and gentlemen, thank you for standing by. Welcome to the Teledyne First Quarter Earnings 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. reminder, is a recorded. As Instructions] this being conference [Operator

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

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

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

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

Here is Robert.

you Good for Jason. And our morning, you, everyone. earnings calls. Thank joining thank

want our results to whole. and portfolio talk Before response discussing about outlook, to people, business briefly a as our I our very COVID-XX our and

can outside and of working health done And the family. our tasks XX% up home. employees use of work to personnel remains our safety priority first Our are been be currently, instructed from remotely. the Employees total have to and

maintaining our usage operational. XX and cleaning remains been are and protective social manufacturing we're where of equipment personal distancing, worldwide sites and appropriate. enhanced office of all protocols But corporate has Our open,

also industrial remain can portfolio wastewater, water and health. exceptionally defense end markets care base, such Our well critical geographies. the and Teledyne's across they and sectors, business public remains balanced open health serve as infrastructure businesses because

longer are supported our -- one backlog. addition, record ending approximately ending of cycle, quarter by and more In businesses half predictable

widespread Looking back customer to the demand. first quarter, any we not reduction in suffer did

were in and impact including we Nevertheless, approximately March operational and policy fact, actually the our and of incur end negative significant to density supply of challenges X.X sales was the quarter customers In record orders some absenteeism chain. there backlog product employee at our first each due at any billion. to Likewise, manufacturing did a appropriate workplace, chirping product. in month to maintaining balancing not our accept the employee quarter availability

and million. And X.X%. and year. our supply operational by first sales from also reduced margin GAAP overall pre approximately are despite positive growth revenue tax million revenue and $XX.X These increased charges, HR X.X% first chain along some demand GAAP earnings of operating quarter last increased. issues with quarter likely $XX matters Nevertheless, organic was increased

all margin revenue, Finally, any for records first and operating earnings quarter period. were

looking Now challenges year. remain. full the forward, and Operational quarter to the in in quarter first the second context

whole. a there corporate as cycles is the businesses and demand tied regarding to XX% shorter Teledyne no are that expenditures global the in of and capital However, customer uncertainty generally economy

the In markets XXXX. will end sales addition, of X% impacted be commercial just as the and few in first some such quarters next although aviation, beyond quarter

we stability. XX, in relatively our have has industrial lower prior for emphasize our Nevertheless, company both withdrawn and to our XXXX. earnings revenue and we it of XXXX January provided and and earnings degree total to predictability the find companies high widen in While other that guidance, a relatively environment, prudent many I expectations current

is outlook following current based the Our on assumptions.

revenue in in of approximately approximately each as moderating four, X% decline lower and we've result although full This X%. by the year-over-year at three revenue end of earnings quarter quarter, end. well year year-over-year range declines would our overall of assumed quarter in First, of the second as an contraction overall

by Second, at we contraction QX, approximately our would assumed more overall in contraction QX. of flat sales. earnings overall an revenue This shortest in about range flat. X% we cycle which our for quarter roughly X%, instrumentation, end segment the high negative in business second quarter group, the have And year-over-year is result to revenue this year-over-year of change flat second from overall the expect in sales in ranging

expect OakGate about midpoint outlook of the sales $XX contribution and incremental of million our to and be segment from At we sales acquisition. range, full including flat, Gas year's Flame

serving at to Asia, serves "back We based half resilient, as of greater the customers also exposure more XXXX healthcare defense has in be imaging given scientific comparison we weaker in expect have these or This plus, year's in a XXXX, nearly segment expect segments sales automation, segment positive achieve and factory we semiconductor those hence, work" to easier single-digit digital businesses market. and digital growth. to inspection low full imaging an

segments, businesses in two other to rates, systems, digit related mid-single growing that is operations electronics high previously. digit mentioned our see defense single the perhaps segment In this despite defense ongoing and continue we even challenges aerospace the at and engineering

commercial electronic a aviation of aerospace our segment. are portion in aerospace collapse in the we However, forecasting and defense

air our than quarter declines. in in transport the OEM first of less decline year-over-year total we're aviation to commercial XX% plus due sales both and While expecting X% a significant aftermarket

segment million. total to result, decrease year-over-year sales $XX we a As approximately expect

well performance and have following. by to the first or the emphasize quarter decline on challenging not want do how segment, depth But turning we environments. in the We to pace shown I the in of recovery. Al of Before duration and the we economic as repeatedly be know the know to past, report perform disciplined the to

We quickly a as cash aviation. non-cycle is where are in and flow prolonged and costs, anticipated, costs managing and reducing such CapEx permanently variable aggressively

with over million balance than under in XXX more maturing sheet XXXX. and cash million exceptionally facility strong our equivalents, credit is our Finally, cash of available XXX

resilience Given our business pursue of the continue we review and ample acquisition portfolio, our to liquidity and opportunities.

who will by further give details Al? our Main, now the and business Sue Al comment segments on will of present four our performance financial followed outlook.

Robert. Thank you,

the from XXXX. first instrumentation XX.X% marine in increased was and highest levels overall quarter. our last sales Backlog In grow in Sales to X.X% year. early segment, at continues increased in the organically it instrumentation quarter

addition, In significantly. improved operating profits

marine As account a over in XXX in industry, just directly of approximately of for this revenue includes marine compared XXXX. reminder, expect XXXX, we one-third or energy annual sold products almost million million sales the in total market while XXX to to

domain, the environmental acquisition and our Flame sales a the In Detection increased result Gas of as XX.X% business. of

this organic growth was achieved certain products, we of sales by addition, industrial offset laboratory instruments. In other instrumentation sales lower but of

instrumentation. systems Nevertheless, continued protocol given Sales of measurement OakGate. increased electronic X.X% sales test strong were to organic flat for acquisition our test of and the due demand

segment first and and increasing quarter, XXX measurement increased XX.X% basis the increased instrumentation. points with Overall in marine margin operating margins and profits instrumentation for test

flat margin accounting Excluding the Flame Detection Gas and for related instrumentation. environmental acquisition and purchase was

life Turning x MEMS quarter sales for digital ray segment, detectors and products the detectors imaging increased included defense X.X% applications, of and to higher first sales for sciences. infrared

of volume. slightly, systems. Sales sales in collectively generally profit segment products basis increased all XX.X% sales and vision as operating XXX increase but machine advanced increased with instruction margin stabilized nevertheless of camera result decreased and improved the GAAP for orders a points,

sales aerospace more segment but sales, severance commercial of sales growth basis electronics than certain in In and X% in margin of GAAP decreased first also decreased and was points facility of aerospace XXX XX% positive as cost decline quarter contract electronics defense charges offset sales consolidations segment, products. to the by lower for adjustments. operating a defense X.X% aerospace due

basis lower In by the manufacturing with to marine, sales engines sales to offset and system operating turbine points, partially from as first well greater revenue electronic and segment, defense due mix margin X.X% manufacturing nuclear Segment engineering higher quarter sales of greater largely higher and related missile programs. programs. XXX increased increased programs, space profits as

commentary the outlook. the offer first quarter some call who additional I now regarding XXXX and Sue, will turn will to our

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

and accounts reflected by XXXX first In acquisitions. the receivable cash income, of of for offset the of collections, The recent million, first payments $XX.X same cash activities of flow impact in operating $XX.X cash from by higher the timing partially activities tax the incremental quarter million provided with of from compared cash operating lower period income quarter the operating XXXX. flow was flow

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

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

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

that tax items estimates Airbus in expect exclude compared In future second the full XXXX. OneWeb XXXX Satellites. quarter significantly addition, note for any year earnings related currently GAAP discrete XXXX we charge and Please potential less share per diluted to with

pass now Robert. to will the I call back

please if you're answers, Thank Sue. Greg, to you, ahead. proceed question go taking and ready

first line Your ahead. Please the Instructions] comes [Operator Greg you. go Thank Konrad. question from of

a with Good start morning. something to just wanted more little maybe topical. that's I

fever interest thermal on last think going is type kind the of you that was cameras a big of screening. are release week and for what's How what I of there non-contact opportunity in an getting out just on world?

morning Good are And cameras, pixel cameras. just They're wafer a we made XX beginning own cameras long Greg. micron XXX packaging. those XXX by to on infrared are the our with produced level of They announced. also. wavelength size. The manufacturing we're as sensors Hi, you of

a interest And We motivated still cameras. number getting those production of positively it's of from increase while manufacturers. speculative, we're to are large

So how big too an tell. is early it to opportunity

part of that talked the and oil rationalization but on or expectations gas I Thanks. size customers. of to have I push of CapEx in you change market? of you and the the fluctuations out within market seen kind price given mean, oil And any shipments about mean marine, then,

put yet. be and businesses is very I yet. of The that we really little oil But to or production XX% answer in to The Marine $XXX XXX midpoint the over exploration, not on perspective. Only million. expecting offshore land is in that Not are about oil have short offshore today oil.

So, most businesses see XX% marine already we in areas. defense, our construction other is of and

good have and cancellations do so we gas, oil far production. we and see in the oil don't orders the that, to X, that's over It's said Having In X.X for it's back seeing Going year. the any to orders, the to in later a of we we're little have considering the Brent, the oil bit happened price and and softening in but what's our of year. softening, that think crude we some exploration, expect yet.

taking gas, when and oil collapsed our the part today part that there in our but were only at majority the good we're guidance, that us sales to XX%. oil in this in a marine 'XX and good is into XXXX, So is 'XX, for that consideration it's time, of is, versus

GAAP restructuring just for then, have a of the some for basis the and given other contemplated update us rest Can me. Thanks. for for margins report on the Do And and you any restructuring had guidance in QX. your expectations in the year you last on year? one

Yes.

we'll more side. that $X.XX range So about have from for on $X.XX; including had change quarter some of We that the first let between do overall latter the were which out. first And things right I is don't the we think doing expect question, worse, $X.XX little $X.XX start the can lower and more part quarter expect second cost In of stakeout get now We the in year, take restructuring. we if the quarter. to restructuring? your me a on

interesting. very is effect margin The

that. Imaging numbers, points. work on be XXX would XX weigh as would of margin the as I high segment points instruments margins With and we which [XXXX] midpoint, as margins will above in XX Digital revenue. go with get should believe guidance, our [ph] about the earnings basis think year. in the we maybe last much always slightly with Our instrument midpoint Stay in EPS in those basis can as year-over-year, about increase

so one XX going we and aerospace basis think margin that's different Defense as systems going the defense, of points. In go But and significantly done will basis aerospace to would okay. very XX Engineering issue. to up go be to probably highest is as margins our businesses, down is do XXX much year-over-year points.

points will a XXX. But go domain. maybe segments corporate in cost overall down over of primarily, aerospace basis So little have and XXX the because control we

in So, can of that, go as on But midpoint points. the right preliminary we overall margins data basis down everything we much know think course, XX as now. is

next of comes line question ahead. Please go Your from Jim the Ricchiuti.

and or many there disruptions position where there risk not you sight the there. be to guess are you normally we're reports in pretty been of was thanks I morning, wondering more the look And least as outlook. have I chain in business business, government environment. Question at issue seeing market. I'm sure Good defense the an supply you. Robert Thank have I'm a in a the the any for there for at offer There even is regarding good half, companies that this potential that had in broader defense business. what detailed could second line is, of

Yes. why our There board chain. side printed is hiccups. are The it have seeing circuit board we -- especially little a specialized circuit we flip disruption printed supply -- in right are of now,

a to ensure working to shifting we We two they're initiative very emphasis our to started that strong procurement have chain. suppliers and actually procurement costs ago, underway that a have years do supply reasonable their with reduce

product our side we'll availability we're I to very of delivering approve so been that yes, nothing the on troubling serious. to far Hiccups What's that them. that customers some expect more, have of defense is

example, Ops. the COVID's a our our of the the restrictions, shadow boats divers which Special example, them. and we boat submersibles, divers are make restrictions the For simple in combat to ready have can't just test for -- the but water We'd because government test

take can't getting delivery they completely. paid without So completely

kinds those over. happening there's So things all of

when we back did know to we and deal XXXX, earlier, crisis. XXXX, it to XXXX in financial I issues. these how oil something did We've in But, it going 'XX, We said, done Jim with before. the in collapse,

guidance. So our we're taking this into with consideration

and thanks. the The it vision on Got business. question industrial machine

about that? up, of there which stability, surprising, factory this seems wondering, pick just is of side. these just you're like a sounds seeing maybe comparisons? you're case the curious talk You semi improvement is some in some a I'm it more little but automation, on markets, easier some seeing of that the Or including about

Yes.

last those Last the a things cases with start weak. me Let in is tough comps, good case relatively had, -- semiconductor we really this first is of try. we is part we one that which and factory year, usually say automation year, have like, or general we

So year are last our as better. year this comps

me Let start there.

vision But vision year. some digital machine the We gives should vision, be overall and overall part think think I think our this takes. imaging this imaging of there's We mission and be will increase. flat system digital flat will systems good

orders display panel flat pretty Our now. right are good

from in the site acquisitions MEMS makes from some micro and we sales line incremental Roper Our Canada, Semis up, we products. have which that cam scientific catching cameras doing well. are do made

some of the to do is So other think going we stuff well.

defense them in aerospace continue. are doing businesses Our well and to expect machine vision and we

going So we say to are last had weak overall, the revenue lucky factory so we are semi I'm because such the year, easier. comps automation,

The okay. others done we've

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

much obviously and So, -- more aerospace more like energy Robert, are businesses for commercial which like now. challenged

confusion when actions. to There taking around debate seems actually be bottom. of kind or things You're these

the of that 'XX? characterize So recovery than that markets worse in these -- it is this are given happening do how you markets XX markets to than takes XX flow over are what's likely these the 'XX to like, they the Or something next kind months. of through, in these are likelihood now in time are

if start me I with Let energy first, may.

that million As oil will presently overall mentioned products gas X% orders will is, continue the two our and in market In soften think the $XXX QX. market, I and and of before, business of than revenues for lag our it's on we our that part the today. next make is are less We it about good quarters. that the

suffering I today, little suffering our are primes think come the will later. a while So

The same on obviously the recovery the happens economy. which recovery come, with the overall depend if would

of strong overall lagging our look the we mine be in it recovery. and the the defense cetera. in businesses, at we all marine will have that, programs kind businesses, both like vehicles We of as Having energy areas which said really confirmations, et area, other

bottom, for I So, will I we don't think current the year. see need Recovery some to all we in But of downturn us. downside as recovery the to us perhaps later. come suffered consequences And the we've later -- know. for

it. we're we from XXX guess also our so. the million we again, Aviation to last the sales, that commercial have X% also about to we're in It's aerospace, again, didn't decline I XXX or really until can't And year there XXX of now, market -- this to year Right Going from XXXX. it's lucky. recover $XX XXXX. projecting lag after

So we two consequences year suffered of the that. that hiatus and was a

indication up, an see things years So, And is turning we that's be businesses. probably recovery. before long a how we're if frankly, the way two of start that's treating before these another it'd

We business folks And are other almost permanently. in things. people we've XX% Joe of on barley other furlough a are our plus out, and taking that out the taken cost

timeframe the than from hit are segments, from in the energy answer the view. We aerospace suffer be the recoveries is, taking deviation. So we long in both should the longer energy, much won't my

Now that's very clear, helpful. and it's

bringing you for OneWeb could let's you things the looking for and year? about flow side, to like of like But your conversion? liquidate for cash out of backlog year? of you mean, not do can and working that? be a potential you kind -- kind you just things free capital talk in Will downs the the that, guys that this expectations write as strip and I your On able think accelerate at you about how cash year -- cash the outside when performance outlook

because by lowering start we're right saying, me obviously, now. Let our earnings

free be XXX, last said how we've might strong million. do, a cash our across $XXX we will flow. We lower execute. it'd cash that a should very things about be year less. be reduce depend think about we inventories successful year, action taking businesses, well year. on than maybe had Last now If to So we our little that, keep are little to how Having free we last out this the do off, even all our laid year's it'd we

flow But, that versus was XXXX. flow if the was cash it other you thing at XXXX XXXX, happened $XXX in when in The 'XX fairly of in free is, $XXX grew timeframe. XXX double look we XXXX out came our cash XXXX. cash million. low; it, million. flow from almost thing In million free XXXX, to ,'XX XXX Free happened same In to like million the went

So, is answer this. the

year at XXX I do around think better. next execute, of we discipline. much this is little maybe ability out if But lesson, okay, stronger this a we'll a history our year we'll to come be we because if

than to year going year; lower that Al is project CapEx be last Our almost of project this justification. is kind controlling by

alright. cash So be I in the And bank. have should we think do we

what a me. China you're you maybe the little of there? businesses last the environmental just more measurement businesses And out some for seeing and Can respective and for of test touch like on bit

Okay.

this to think back it, you didn't "framework". Let ask the because things I work of in Joe, but may vision machine me, I business if

We the products, care but -- also in doing there. machine okay vision, machine in health we're

the bit. we're a In and test little lagging measurement,

had legs and our our other protocol two the hand, it. test to On businesses measurement in

at for oscilloscope hardware. of systems affiliated and One is looking electronics

here communicate really are standards that China. in imaging both other The we're in protocols, the by digital and part, which well, which area doing systems the

expect a test be acquisition think our year, and measurement, it probably to little of what going it's we down so be And because this I of while essentially flat do T&M, we there. to

our But problem. is or we done it might be So X% X%. not China

Europe America. is North Our really right is and now problem

China, monitoring monitoring, And that's in that environmental, air as there different in One, of to reasons. of some weaknesses two quality and Moving measurement. a there. lot We're measurements make well air seeing a we go compression we as continuous quality, story. see product

initiatives is That's troubling, is as Chinese in second made The much even product. We've companies had thing, United which manufacture Chinese mind products do to assembling a America issues. more there Chinese a not but want there. the emphasis there little Buy because initiatives to previously, buy I emphasis like that of that. frankly, there's don't States. don't strong products the government other And discussed I

seeing of but some business. share the little we compression that's have market get are and and will do with that we So products compete we in a new everybody our and we there worrisome,

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

about into that, much the it the take you monitoring? this And don't temperature application, skin you before. for have skin know thermal I sensor Can if again, guys talked

So where that can details you can it just spectrum the given something supply it capabilities for the you chain could a fall That's, remind of of is do And little on think Is that? fast you that? you or your ramp issues? on maybe handheld us production a then all kind scanner? secondly, how more scan crowds

Yes.

with of question, start Andrew, I me the part may. Let if latter the

level sensors And As I such that companies devices, in on foundry mentioned, it we in the make packaging are Bromont. a wafer we scale. ourselves Canada in make unlike MEMS our making other

supply So, we our chain. own are

tell the good newest fast for Caliber So obviously, we a how you product. about of that various to that, been grow we've year best cannot as longer. increase And just going as part. they're we fast handheld, our about They've production The been called that's The can do making versions can. the manufactured. cameras but or I talking we're are ones are to our camera Caliber. we're

we the amorphous are the other use nice around XX are sensors, oxide micron pixels based really we sensors that products vanadium a of whereas also from made the Our that lastly, cameras are -- sensors silicon. world make lot

had there. billion this the in really move domain. revenue know think I we niche company. $X.X a is companies because there kind I a that whether this of ton publicity we needle are have So don't know have of some of other

the Can French sit that getting rationale potential acquisition, about where the it Photonis the in you and behind Okay. do with Ministry talk you approved?

Yes.

one. Let whereas it, of rest rationale. our Photonis world have two me makes in has this have the war an it And fighters. restrictions. for easy they That's the the country primarily start product vision to that that's companies do product night don't with almost ITAR for ITAR-free the

The part life XX% is is there sciences, second that but the of again, is defense. business related, business in in

do they they've significantly the they've processes, a imaging what have Now, invest is or because is supportive we product, is they been to have that I but the digital have, complimentary lacked it. acquire what what nice nice imaging to infrared sensors just very they what companies Almost by private our would mentioned. lacked digital equity, do complement ability including in everything

So is the that as future of we digitization will, domain obviously and think we well.

some So think we significant product. made to capabilities that we

we? Now, where are

negative that Unfortunately, Economy to the opinion the going that have on France essentially were quite a we they XX, Economy, is Everything There of March going saying verbally Foreign by Minister indications transaction. were We then. some don't know. gone of are since be be the notified Minister Office that may to total reconsidering. there has of Investment

develop. detail. Ultimately, two one They the will reaffirm scenarios verbal or can

a in we're written everything response because from a is decision with is has it final been people our made. buying have that We escrow until from the agreement such them

is which conditions once or written certain back agree the to on but transaction it. would agreement put one a they'll be it, same a their So verbal, reject as get and they'll following. come we of Either

we Now, businesses France, used operations bought we in France. certain are would to in have because conditions two

years government, certain eXv business In which the terms because supplying in both businesses, interest. those were First, we our et best bought the terms French several et cetera, Flame ago, in year, how there of And from conditions conditions XM. those last they because kept Detection cases, Gas also we they we frankly, be bought were agreed were we long product and to in of to cetera.

have and in record relationship offices of that them. we we have a his So Economy the really domain, track with a and good good with Ministry

it. could the are if onerous, So honored, live we they could conditions not with be then

On able company, damage to conditions to be other complete the would the transaction. if are onerous run the we the that ability our won't hand, then

So hear don't of of answer that's a the it giving could And from be know long them. have. best couple or I it expect to shortly you we I months. be way could a

questions. are no There further

Jason Thank I'll Jason? conference you. call. to conclude our And ask now if I may,

And Robert. again, you, joining for us thanks, morning. everyone, Thank Great. this

any and questions, you number are Web please to news the course me. And up SEC on follow releases have is If available. the my and feel on our earnings of filings call periodic release, free all

give information Greg, audience. you, everyone. Bye-bye. the So now. we if thank appreciate you replay shall could the to We'd off sign and it

Time available and Ladies through you. after gentlemen, Pacific AM today replay be Thank May this conference a will for XX XX.

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

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