Teledyne Technologies (TDY) 22 Jul 202020 Q2 Earnings call transcript

Ladies and gentlemen, thank you for your patience in holding. And welcome to the Teledyne Second Quarter Earnings Call. At this time, all participants are in a listen-only mode. Later on, we will be conducting a question-and-answer session. Instructions will be given at that time. Instructions]. [Operator like call now host, to turn VanWees. Jason to would over the your I ahead. go Please

to Laurie, before you, VanWees, I welcome earnings release President Jason morning released We opened. Executive and quarter our everyone conference to call. like this Thank would good market Vice and morning everyone. earlier second earnings the Teledyne's This is

General Officer and are Robert we in have reminded Al attorneys is Pichelli; this as subject CEO, In Secretary, me differ available And Joining be replay, me CFO, Main; both and After caveats order Robert, President earnings via Sue the morning Mehrabian; that of may avoid assumptions, periodic remarks today Compliance course, disclosures, webcast for for month. our are this we risks Al course, Teledyne's and questions. potential various made and one call Counsel, and Cibik. SEC will tell Melanie and noted before to to SVP, Vice But dial-in materially. simultaneously webcast started, approximately of and will Executive President a to and Chief your being statements Chairman, by get Senior ask Sue, release our and filings. results forward-looking actual all selective you

Here Robert. is

Good Jason. for joining our thank you, morning Thank you and earnings call.

laboratory worldwide Before discussing research our and as been sites, manufacturing our as that want well corporate to of results, and have I remain all our office emphasize operational.

a Equipment. quarter. operating outlook I distancing, a the our remainder and current Protective of the cleaning record XXXX. now usage for the safety our extremely make Teledyne protocols, about our facemasks, because of performed challenging manufacturers, employees, we're economic However second of in for well remains enhanced contraction, in and Despite environment few our continuing social the and priority environment and health Personal comments shall the performance

results disciplined reflect execution. and Our control aggressive cost

Also, first remains well the compared overall operating to and quarter provide basis short us credit portfolio approximately our margin and outlook GAAP and cycle us confidence to predictability, across both in XXX business geographies. fact, increased a last line level end-markets exceptionally year sales April. provides mix of and X% the balanced helped decreased business our sequentially of -- reasonable of although give In XXXX, Teledyne's cycle points.

test Looking better back at markets where networking, for state had January. the and forecast, lines we to measurement, to market negative which capital we relatively demand continued product played serve was envisioned. predicted the as remains spending of results overall said record the analyzers, related for second and a versus In protocol robust. quarter storage and than April, second to sales demand solid and X.X%. quarter, quarter X% in demand That instrumentation was out due year-over-year OakGate technology actual for decrease business, outlook These acquired cloud

On was imaging the than new fewer saw where other treatments; due deferred were sales Otherwise, destocking; surgery a else three, weakness but not everything in to our occurred from to slightly cancer essentially radiotherapy patient declines expected. equipment in expected, OEM temporary customers and markets sales dental also and one, as we installations forecast, in two, hospitals. COVID-XX due hand, healthcare lower digital only perspective

cutting flow XXXX superior cash improvement margin margin, simplification More of including half delivered the and each April actions, importantly, operating earnings, of in Ongoing processes and results. cost our our expectations. first exceeded progressive

to remain forward looking the overall. we positive XXXX, Now, balance of

recovery in Americas a to improved Just in quarter, in late year. the expect as and first later commercial this Europe we sales sales Asia the

very quarter. begin In similar third in assume sales and to we in such quarter level fourth However, recovery the in it light is shutdowns the overall expect to of the restrictions, words, be travel other will the to initiated QX. prudent

full and XXXX commercial sequentially sales Systems Defense commercial a expect with Electronics As approximately year's forecasting the a and sales the imaging sales in and be aerospace recovery result, increasing quarter, from forecasting we we're declined in Engineered robust -- recovery of fourth in not to We're now now XXXX, continuing instrumentation X% a remain XXXX. year. throughout to in

this contribute total less to However, market than revenue. our X% will

report Before to second returning the to segment, Al, emphasize to quarter on performance following. by the I want

know in the in have we environments. as challenging and First, be to repeatedly perform how demonstrated past, well we disciplined

same the flow. cycles, cash in challenged, prior earnings, while we where Second, protected revenue time was at increasing

at over in was X%, in XX% Teledyne flat free flow GAAP example, X%, declined total and increased increased for cash from were revenue and from again time. time. record record when cash was XXXX, and again a a and when flat GAAP Likewise, Teledyne XXXX earnings XXXX, at were For earnings XX% XXXX declined the for flow over the free revenue

in importantly, structure. the lower over doubled nearly to we subsequent years. More GAAP earnings subsequent kept our years, cost Hence four three

strong following market were weakness, largest acquisitions. complete and our balance addition, sheet, periods general able we Teledyne's In some to due to best of

on managing announced For and DALSA well permanently reducing as our in Fast of as which variable Teledyne XXXX, acquisition costs largest example, we days. were forward eXv those appropriate. acquisitions of XXXX. to in both Teledyne XXXX, costs We're where aggressively

and segments. the sheet balance over business $X.X our now exceptionally will performance Al with million on of of a four comment over cash borrowing strong capacity Our and $XXX billion. equivalents is cash of

sales you, flat overall second Thank last quarter. instrumentation in were Instrumentation X.X% in our the quarter In segment, year. marine Robert. decreased versus Sales

profit business improved pricing simplification activities. due and initiatives and operating procurement improved to However,

marine third or approximately our over while energy industry, of sold for As reminder, the total a acquisition In we to to X.X% market XXXX includes business. products the in this as environmental annual compared XXXX. just result of expect a of account sales $XXX marine a and million to almost domain, in $XXX Flame our the sales million Detection Gas revenue directly increased as

emissions sampling. systems the decreased as and test as of sales oxygen could of markets, medical monitoring gas and in such flow industrial during increased quarter, measurement stack this declines and X.X%. While not sensors grade electronic and the products certain wastewater offset general such Sales

in order our have strength was and trends flat there margin sales in declined improved and of million While were and facility in despite U.S. year Overall, in severance with last higher and general Solutions sales oscilloscopes profit Group, purpose weeks. costs. Instrumentation recent and in Europe Asia Nevertheless, $X.X operating the segment year-over-year, leads especially Europe Protocol consolidation

Turning the to largely Digital of primarily for detectors quarter sales detectors X.X% decreased partially industrial medical greater applications, offset by sales and vision market. reflected Imaging systems segment, sales infrared Sales last flat second x-ray for defense of with year. for were dental lower and

call operating electronics America. in marine, basis the margin weakness second operating charges margin decreased some due nuclear record segment, to semiconductor sales for of commercial due quarter in Segment and as commercial In XXX to commentary last increased sales markets as margin regarding largely in defense GAAP were offset defense was some the programs, sales quarterly margin as from revenue segment sales with second to points electronic who achieved, operating aerospace related second greater XX.X% XXX services. manufacturing but quarter quarter primarily segment, facility below XX% GAAP lower more outlook. our as additional consolidation. increased of well I offer points inspection segment XX.X%. the Asia In of in was strength sales end ever highest and Our other points. declined X.X% all-time manufacturing than of lower offset space Sue and as by Europe products North and the greater over decline Systems aerospace of second XX.X% OneWeb. to a but basis turn will profits XXXX well severance year's Engineered and will XXX sales the also basis XX% now

second million quarter second expenditures lower quarter tax for million operating operating of and cash the with of million the operating activities operating you, reflected Al $XX.X to and quarter quarter million period improved and in same our deferred amortization compared million covered quarter the good cash some of additional flow net third option quarter XXXX. million ratio was for compared million is XXXX quarter collection then discuss with that We million capital the cash Robert was XXXX $XXX.X to compared less in that $XXX.X with and activities, of Free XXXX activities in a same was million by flow expense compared second million $XX.X second quarter, net flow the XXXX. the debt debt second in $XXX.X and cash $XXX.X In is compared morning $XX.X were of Thank Stock first Al, accounts cash same will less the payments XXXX. of $XX.X I period in partially for million everyone. with expense for will and for in expenditures XXXX. of quarter in second by of cash quarter million of XXXX. $XX.X income. million $X.X $XX.X the ended full-year the Depreciation XXXX from receivable compensation financials the Capital the second of outlook. offset not of debt to $XX.X was capital by the of I period discuss of million from The XX.X%. $X.X of provided $XXX.X

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

currently quarter now note items expect the earnings Robert. charge that to Airbus Please per tax exclude any estimates potential XXXX pass in call the XXXX. back OneWeb for XXXX will Satellites. full-year I share compared to In we third addition, discrete related diluted with and GAAP less

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

Jefferies. ahead. from Instructions]. Greg And first question [Operator our Please go Konrad from comes

margins, in then similar of little and outlook one-timers QX and bit in margins whether a restructuring embedded margins? made in like have I should anything or in flat. maybe you it think to of terms are of organic Just assumptions in I QX what then ramp in on it's the seems the mean down HX we you type mean about kind start EPS growth QX, took a

Sure, Greg.

in was first the so margin pretty First, let's up And to further, low at we margin operating should to we end QX go We XX.X%, to XX.X%. about going XX.X%. XX% up the go considering the The -- around it'll is quarter QX. margin. in year to up was the back go at think QX, think

the in had continuous to to forgive improvement your with? of And we margin. question, have expect So, me, do second part

called of kind Just you into? have any you embedded additional restructuring,

Greg, think about I Yes, sorry that.

$XX We million about have year-to-date.

We end are quarter we of still the about were the by our XXX second we people. workforce, -- reducing down

We will in the about collectively; we that's million and of XX,XXX expect out maybe of so think million down below let's XX,XXX ends. end charges a of $X when just $X be say to by the Consequently another have year the year $X we'll X.X%, X,XXX to it QX be QX million.

then you the a of the end the of Instrumentation but year better think imaging as maybe called opportunity most a digital of of bit to maybe there's kind digital And increases exit where little the out see kind imaging we we being ramp toward I year? mean of and expected, kind little into kind when QX. bit a is than about worse

Yes.

to in surprise that that that treatment that people What circumstances. that Let sensors because down was cancer radiotherapy that What quite -- out in would tested cancer was the most the current we and are our found because a therapy, dentist equipment really the types that the the in of to in we for be me cancer and not upgrades. imaging we following: be or people cancer colon downside -- us market a services was expected shrank down provide was various or of for to bit. dental going digital surprising was the little slope the

say would QX upwards in $XX QX and that in others, in Now, flat imaging, Instrumentation. we relatively that think as, well maybe having said digital as have think in QX, that we'll with should be we I primarily million of

expect we do to better QX. in collectively than they in much So those did QX

opportunities? you're then you I kind update cash laid one kind out last expectations, me, of And last just of mentioned free I in that, then where kind of had running of quarter. tied terms mean, what to in M&A of And flows you ahead we your of kind Any seeing mean, change near-term any and of appetite there? terms for

start me cash. the with Let

$XXX million I $XXX the flow the to -- cash free a that for to be say of now had free $XXX us. flow. million, to of think year. a we in April, the record Greg, more, million I of order little In about expect maybe million. cash going circumstances $XXX numbers to at at current cash probably the Last be $XXX mentioned just up but that million order we year, let's I'm be that round that would for

can be record. we that would exceed that if So a

mentioned Now, going back, with it. going have buy buy order the we to is in as things comments, EBITDA Anything to excluding of some have I my obviously EBITDA of associated capacity acquired we $X.X billion. the

capacity much guess depending which a on change the that, could in in at eXv hazard I have is up it there price. acquire of maybe buy. the That situation appetite able with $X.X we is been because we DALSA billion. hope economic the acquisitions. sitting undecided. going we have conditions more would and the like as acquisition said not Having about were did take one And year there as Photonis significant XXXX were and very to million, a out those end environment little ones those to them the higher $XXX by And performing for XXXX. [ph] of this just we we that's well other in in reasonable So the be what in still as I'm may businesses currency. a for then

will as our time time improve also. position think with cash our I with appetite improves So

Needham next question Ricchiuti from our Please Jim And Company. from go and comes ahead.

to there business the is opportunities follow or imaging where in still Instrumentation digital look you. to of Robert, Hi. up activity, would well? are for to areas acquisitions focus if at M&A comment, you just Maybe at Thank there that look on more you M&A are the like you as that in pipeline,

You're right on Jim, both areas.

would really acquisition it obviously think make Photonis be a able a if I complementary acquisition, to Imaging. Digital imaging, digital were good complementary to

second and in On make high our margin we hand other too. the the there that's acquisitions to area, Instrumentation would like business,

the noted. main So as you those areas two are

terms trends color quarter? some just Can different the the were book-to-bill any the the segments. these give And how Okay. maybe in I in there's to been variability -- in you book-to-bill as booking the assume general and us in

Yes.

QX good -- think really we QX, We again especially the think end let year In back over over That just and X.XX% below Systems. lumpy went Let We go in the to should so QX. of We quarters about a our QX about me start dropped QX, south. should we'll X%. X.XX% by things maybe in X%. QX. a that me QX Engineered includes be were year had order. end little X.XX% pretty improve book-to-bill in we'll to we collectively

T&M the and a Systems in domain. would is we Instruments just being of have in should In end QX, we little Instruments, and Aerospace should be X% be imaging, QX QX year So over end Aerospace would the general we I whole With low business, little Defense, down you Engineered up to our is Aerospace think lumpy. even there. consideration in -- okay and north Defense think decline will up, we're I pretty of and and X%, a X% because think under we that X% with be think that when pick be into so book-to-bill so take we just the should X%. I Digital

the end. around think I to X% be matter. It's doesn't So, going it in

have have of of as line But Okay. light business, economic a other where less that to of relative question, sight some maybe that short just potentially you on as the X% do at of? -- cycle more And of there mindful look portfolio kind sales visibility revenue year the That's final businesses. uncertainty is you we of least be you the in helpful. obviously Robert, the environment, at to full need decline in

Well, down be would and be declines and think the example in on We would it for been. I as the XX% hit most it much XX.X%. be about Aerospace as pronounced Defense think the has year QX that in for that could as head. think you We

with the alluded to. seeing some have Europe analyzers in even in improving okay, especially It's we that got diverse also and do portfolio. really I early encouraging the is environmental. might We we be and since of the the for T&M in Al China go pick or the the But will year by think signs up is in instruments margins acceptable would we've subsequently doing though so is and and will as beginning me in the of some I XXX acceptable. U.S. well. along very the year environmental we the in to tell, imaging. X% has to we're some but percent points digital We some also think is pick improve I'm the Digital that up to really be Measurement a hopeful our July down is a decline think as margin environmental where basis danger so which protocol risks think are so, Test end there throughout is because full-year We're early of as

from Please Company. next go our from comes & Joe Cowen ahead. And question Giordano

you are guys. doing? How Hey,

Good morning, Joe.

how more and more structural was temporary how to start come things you pick about Can much may to you in kind declines up? in quarter as that back have how cost savings talk them? business to back, much into versus savings nature And of due the and characterize volume the was

we is there good that then Yes. cut have The people $X.X those where we we've we folks folks. What people. $X.X spent have billion; come been replacing savings, from approximately We really happened so orders and turnover, Joe, haven't strong except expense. are primary billion

$XX year $XX I to for savings forward take rolling big the we as of change charges could net so million. in And people is as think the be that and much that million

is said previously. intention cost structure into that, sole year as next that it having our done low we've Now to keep

initiatives at done million. another we're suppliers. here, our The this have savings target have other that get a very cost [indiscernible] because because over a them contracts we're savings not strong we of we're is million and and favored because buying is of procurement with we buying us procurement signing cost year save can that If will area in we $XX saving savings that lower in $XX

reducing I of the I'd maybe going half half We've proactive in say really demand was the lower to kept answers that XX% X,XXX years. as that part and at complexity of is forward. our it people like In tanked mentioned, what where I move it cost we've intend down the hope that to terms in we that and of other we was. And on because prior in operations market your market our done keep question. controls our

It ask does. wanted to on Thank I you. China. also

you're said a would a low levels characterize of through some restock the months. versus like you the over of there as much You demand? seeing -- that off of real How that is last of better couple how signs of actual pull

I think It's it's good first the over as quarters. last year. not two it's -- its not demand it But was driven. improved as

that they said sales. efforts. their I upside that, think they -- only is as X% whole have our is back-to-work total of Having a China the increased

China, Korea, demand other Taiwan, Asia, in overall, improved beyond places. in also there's So in

that continuing pick will a finally that improvement see the Europe kind first of some Americas. demand we up there and we're in then in projecting in So and

guess downturn you have us on dramatically Great. about M&A like down talked you companies the prior you're where to have pretty able for are This a here? of gone close It but And I looking actively you is color weird give of businesses prices then downturns. on what economics what can and in maybe sounds me. last not.

their seeing are So selling deserve? you price what people and companies how of in valuation what terms thinking are and they about

that's back say the Everybody the piece have gone down, XX%, by not prices rearview in of mirror, over let's right, time. even keep looking an as though have some gone excellent the time; the people an XX%, and rearview of the that Those Well, companies have said price that's mirror in down question. deserve. patience much as they're expanded looks that they and it's as to these going much that, the look have shareholders say, rearview various in and Having most degrees the mirror of and have as boards management opportune do. shareholders

are us. certainly that us. we're there going for opportunities for are trading to going ago. think be There I but price be were to at, We year a able So at they something what opportunities may pay get market not to not the it's

our what's see of So through way opportunity we'll -- kind list possible. that we're searching to

Instructions]. [Operator

is Lori, to end do if there's to what the Jason I'd like call, to nobody else and ask asking I'd the question, please. a conference call like conclude

us and everyone Robert, Thanks Thanks. joining again today. thanks for

information have questions you number please the Thank the if earnings the appreciate me you'd Lori, the would call, call course close to it listed if release. give greatly. feel on and Of you. follow-up at replay free we

through conference may and code, Time your until using the XXXXXXX. may dial of is does for for once Executive XXXXXXX. our callers callers may International that again XXX-XXX-XXXX the is USA today. callers access USA enter available XX, and conclude numbers your replay the access gentlemen And XXX-XXX-XXXX ladies you AT&T code Teleconference and for using XXXXXXX. enter participation code code Thank service. same Pacific XXX-XXX-XXXX, international And XXX-XXX-XXXX callers the XX:XX PM August And dial and those dial access XXXX, Daylight are and

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