Teledyne Technologies (TDY) 27 Jan 212020 Q4 Earnings call transcript

Ladies and gentlemen, thank you for standing by. Welcome to the Teledyne Fourth Quarter Earnings Call. [Operator Instructions] I'd now like to turn our conference over to the host, Jason VanWees. Please go ahead.

Thank you, William, and good morning, everyone. Executive everyone at and to earnings conference VanWees, want and full Jason release welcome to our call. is Vice Teledyne, President I year This fourth quarter this earlier earnings our released We morning.

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

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

Robert. Here's

history. margin fourth margin We the Good with best the morning, earnings, basis points for last quarter XXXX, XXX increased for flow our on comment outlook the you, to begin cash concluded FLIR. joining on of XX.X%. XXXX flow of results, cash in Thank operating company's increased earnings increased XXXX Operating course, discussing Compared year, and XX.X%. acquisition free and I'll call. and the and comment by Jason. earnings briefly our you pending thank

record challenges cash quarter in $XXX.X occurred, GDP cash second manufacturers the It and over emphasizing, full flow increased the the is For COVID-XX by XXXX, to and during non-recurring the the million margin in despite year and GAAP pandemic. year million. performance margin constant charges, $XX full flow slightly faced negative operating significantly XX.X% increased free worth

thank rewarding majority our our one efforts, difficult entered I stockholders. the our most XXXX with for to my as well businesses. offer improvement their employees for in most of For a of year the congratulate to into across as a you clear want sincere them of all transforming We demand

orders In were X.XXx $XXX received and quarter backlog ended billion. $X.X backlog. record or fact, fourth sales we in XXXX with of QX record with year-end orders million the

expecting commercial well early in both in still cases, in businesses government recovery within Imaging continuing as businesses. our our as segment. XXXX, it's we're strongest growth our Digital While In

tug X% Given X% some between between shutdowns ongoing caution for a vaccines, organic is the outlook conservatism, we company's and of and for and the XXXX. to related reasonable total think war growth

Of be revenue course, the relatively with first largely pre-COVID the will comparison in most quarter flat. difficult the

acquisition. in are to I comment FLIR when now the our bay We Finally, believe infrared space we on entered XXXX imaging FLIR segments and technologies uniquely imaging infrared want since market we Scientific Teledyne market complementary. and that Imaging. acquired We've first then and we been believe watching the

evolved, both be As companies grown we've to even more complementary.

XXXX. entered unmanned exited business in importantly, drone the Teledyne the in and subsea XXXX, robotics more in XXXX example, unattractive the For each recently, more XXXX and business entered in land-based Perhaps company Teledyne and businesses, FLIR business. FLIR airborne

business similarity imaging the and In Teledyne's segments. with end more our consistently related Al machine our infrared of imaging, technologies performance XX for digitization, algorithms, and an am flow, sensing industrial our of there than respective conclude imaging desire businesses. fundamental each synergy compounded or vision never now imaging, comment image segments FLIR. acquisition across words, excited on four the future and learning market and machine the better have other Teledyne true marine Nevertheless, I I and was that extra cash earnings This will our predictably noting has customers of today XXXX years, While and and by technologies will no of is in organizations. information. software different, been I and our about for sonar even pending are even is is different. underwater other

with you, decreased decreased Thank last compared last X.X% Sales of year. Robert. overall fourth sales from instruments environmental In our segment, quarter when year. X.X% Instrumentation

increased sequentially from third X.X% last sales increased. with samplers as products, Compared year, such certain sales However, the quarter. wastewater of

part Sales offset basis However, the In record, a measurement monitoring such test declines this year-over-year XXX to a of in quarter ambient comparison XX.X% operating increased million. XXXX. by a selected difficult was margin as XX.X%. more Instrumentation and decreased the quarterly and instrumentation of segment than sales $XX air systems of quarter, in year-over-year fourth of industrial sales, points X.X% with products, overall electronic Sales to instrumentation. to record marine of increased spite due lower of

Digital the an X.X%, year-over-year infrared and increase basis X-ray and Fourth XXX visible and imaging, to also, detectors of XX.X%, the margin of core primarily dental decreased of and sales points by reflect segment. Imaging medical space offset turning Now operating for detectors quarter greater a partially segment was applications. record. GAAP sales sales for

to outlook. commentary to some the by Systems other services. decline as XXX manufacturing consolidation as than will segment, sales as products increased primarily XX.X%, will call and compared sales operating XX% Segment of and Engineered Aerospace XXXX as now as as first contract were year. the commercial I space OneWeb. turn greater with as quarter full lower fourth Defense nuclear programs quarter sales fourth facility The year lower sales Sue, decreased margin million segment, manufacturing defense offset the a quarter due more electronic points basis additional in operating in sales XX.X% Now sales revenue regarding who margin defense, well increased offer the severance $X.X GAAP from in other well well segment last U.S. declined In and to charges. related and aerospace to greater commercial due

and to the was cash our for the from year Al, $XX.X you, compared with million not quarter XXXX. in quarter, quarter Stock of less operating $X.X will to same expenditures, good million capital for fourth for million million compared for of of $XXX.X $XXX.X $XXX period the were compensation the of We quarter $XX.X is XXXX. the amortization million full was debt cash of covered in operating compared financials $XX.X a is period of and Capital and $XXX only $XXX.X the outlook. everyone. ended Robert and period million in cash was $X.X additional million million activities first discuss XXXX. first less In will the Al, option quarter fourth some million free I the morning, of in was expense flow quarter XXXX flow Record of and expenditures of $XXX.X for Thank then activities Depreciation XXXX compared $XX.X by the million same the fourth of million net cash for XXXX million million quarter same I to with X.X%. fourth flow, cash the that compared XXXX. discuss that $XXX.X of fourth XXXX. quarter for debt, period debt-to-capital net ratio same to expense from

be share share. quarter outlook. rate, share in $XX.XX acquisition expected believes of financing our FLIR range to reflect to XXXX year XXXX, earnings discrete XX.X%. is the acquisition to Turning per of and XXXX $X.XX related first case, and estimated excluding Management our to full do pending The per $X.XX the currently for items $XX.XX. of the And per that full outlook these in be will is In earnings tax costs. the not each year

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

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

first Instructions] will line question ahead. Greg Please Konrad. of from [Operator Our go the come

Morning. Konrad. Good I'm Greg

you, Thank Greg.

thinking a just thinking cycles mentioned segment organic across about You X% in business? XXXX, about on that the growth different basis, X% how the are to but you recovery

Good question.

And head about us only the Let's our leading just In for Imaging, Imaging test start our for over is even about in the sales In maybe about Defense, recover Systems and year, revenue businesses sales. great increase of among X% had the Engineered a in go expect year improving our environmental Digital recovery. year, would we best we And and to of Aerospace though year down say, Aerospace. Defense instruments, especially Imaging. up X%. I expect improvement, all X% this tough a theme measurement and with in had with terms we businesses, went next our we think year, would especially our those. X% Digital Digital in and X%, some instruments. a the businesses

X%. to something laid than So their like it adds that's sales way I've Greg, hope I so up X.X% it very to And less to improve we X.X%. the helpful. there, far, modestly expect out,

flow cash and of going XXX% are I mean, any XXXX. the you And conversion conversion, on close, I was is And thing early, it just mean, out forward? think maybe just helpful. quarter at that, stood very in conversion I this that looking free mean, kind That's think is just too the changes? year, reason post-FLIR of to I that level how there like about the other thinking but

down to though it down relatively got the some But let We course, But would come our already a be flow because, onetime of relatively said, think and we record our pay the affect benefit free that tax, maybe we you conversion Even let Greg, first. a with cash we've that this year-over-year, doesn't little that, flat, last of next cash a it still as expenses the that $XX year. be the of having will -- Well, so FLIR charges in, close back put think about be to -- payroll said little accomplished year. is, cash phenomenal. me year. outstanding me I FLIR very start million There absent year. was our is without acquisition, the maybe to had next flow going flat, flow, that with you

now historical is together, based I Now I that EBITDA billion. for us But the is -- with flow right -- difficult trends, may, think adjusted cash because that if about we adjusted the of way would we can would describe to it's $X.X What acquisition determine it what on have be. after an FLIR. basis, on an

about and I knowing at And know. can Ours time I the that's what best theirs. do this

And then just helpful. That's question. cleanup one quick

terms around and on that? rate In timing mean, thoughts kind I the you. any Thank financing of of debt FLIR, for

Sure.

date. progress Let noting where and made me start we to are by what today we've

and institutions for banking We our loans. have have term we with secured our interacted financing

which agencies, after we investment-grade we First, we $X from of do rating, do we will billion in an rating come and Moody's And get obtained will billion need which the rating have after And have -- that S&P. a and we bonds the have will of corporate after that loans, for. a that will $X.XX commitment for we we've remainder we the term I ourselves think financing.

multiple debt-to-EBITDA a about net The X.X% say X.X, now think we'll is thing of $XXX commitment our put net hand to would to other are important have X.XX% is last have us that, to we conveniently that, thing position I our in a what credit covenants from acquisition. we debt. also would and And the after that's the billion. where about about on we increased this And get in $X.X managed it to our line million over to increase cash is

can best So I do. that's about the

of -- borrowing order. our of that guess be X.XX%, terms going about, rate best In rate it's time, maybe at you average X.X% to this asked that

you. Thank

Sure, Greg.

will ahead. Please from Ricchiuti. go question of the come next Jim line Our

Hi. Thank you.

yet -- So are expecting to us, that detector in Or just as I Imaging Digital Robert, you just the may, are improvement the that you're Is signs the get starts recover? the in I lead business business to the pursue, recovery you assuming in seeing we X-ray behind business? if XXXX. of pandemic wanted

already in recovery the which recovering there have where little Then some slower, go into x-rays for There's X-ray but seeing dental seeing we two CMOS cancer that Well, And imaging, case, make there. are we're there's components that's are our both we're machines. to -- for these recovery in we the parts image some imaging treatment, that. X-ray that a recovering. sensors,

right least than At we will the more see in that. I going our of that would maybe guess healthcare, overall, say, little a now, order say of So our that's I'm X%. recovery to

kind what And it. are the in you vision portion of Got the industrial of recovery assuming business? machine

machine that think you vision, I total if at in recovery a include XX% which expect scientific cameras, in look we this would domain. the about year

it. Got

that the in unusually any of bookings, the to you QX, that that strength -- strong was saw led so major segments a... that were And

question. your I sorry, you I'm Yes, should finish let

No. Please, please go ahead.

mechanical I systems businesses it and Digital businesses was was for electro think Defense micro X.X. all that bodes well in Aerospace our about foundries. again, the our and And cuts us there, strongest, including it Imaging, of across because the

Got it.

Okay, thanks very much.

Sure, Jim.

Our Please next Giordano. the question will line of come ahead. Joe from go

we just so commercial Electronics. what you need in the Aerospace and given we that do space, and the back recovery what's Defense margin start know the do out. Like, margins conservative I ramp of in think taking how to being where business, Like on cost revenue were get in that side. that about given you're happened of back to Like the for Thanks kind what you I'll to about took on before? run-rate achieve questions. --

of is the don't course, recovery this our Aerospace businesses. Well, story. revenue, time expect one We much at in

XXXX, we our a in of On have we do of -- XXXX, in margins Defense. our margin to Defense we we the in margin, hand, businesses. back But In took some the a other Aerospace in In XX.X%. we coming XXXX, hit real question and year, had expect XX.X%. improvement last took

XXX So down the almost points. went basis margin

on we that expect about just XX% that from even we're business. out margins improve cost points primarily XXX improvement the Aerospace better recovery in We basis expect everything It's a expect, in we've that business, to we the little based doing. and side of else don't takeout much the XX.X% costs of approximately, the to all taken than or though

Perfect. expansion Swiss I was That's saw an really helpful. on that there awarded contract. a

there? like, the offered path a kind flat as Engineered of Engineered you've that based years schedules just I the a deployment just on year contracts So you Systems won and kind good of outlook. mentioned the over of few What's next pacing the in curious think

Yes.

and doing at of First, up are first away business harpoon the let for say engines missiles. that back that's there quarter. will missiles, the to And -- -- shrink. we what is make we turbine be end going And going me specifically

our that which I should next turbine of businesses, So million $XX year. think revenue also terms are impact about in of profitable engines, it sales

side. So that's contraction on the

year will year-over-year XXXX. side, us expansion we hopefully such great the in which keep have flat On since a

had a won the multiyear expansion some we that contracts contracts, we releases. side, On $X.X in year. news of billion new about put or of And contracts, we we which number last of contracts that of out total renewal think

to Swiss, that existing Then what in boats, -- in numbers, contract sales And uses put they'll foreign have is For say, for that million. we about programs, have we're very our rough the you is to because, military $XX-or-so-million, as which $XX $XXX and advance, example, of marine coming business it's we million. that sensors let's business. back new add which And we that's we vehicle the a a about about, know, about excited up are businesses. develop our plus our underwater also a lot that received

want that you question So answered don't know I that's it. your well if -- as as

similar Yes. similar Yes. rate that of expect margin the a run Yes. for Is revenue business profile kind you year? next on

our year that go some blowout programs. of side manufacturing No, year I very margin at and because down business. of this ended a the on the turbine year had about think high that That's will margins just of in XX%. business, primarily We engines somewhat. We

down XX.X% next I think going to to to year. go we're closer

you're any full on assume That last I then presenting of And the it? were rate once you makes year think of for sense. Like thinking just $X.X kind equivalency. you I a update talking, billion me. that close run like EBITDA that's FLIR Because, how

like point some onetime at comes incremental it? as plus during to performance do think So in costs you the that 'XX. going associated you're the present with How operating

to know. million. guess to aside, It to is could do, going as But I'm higher guess. we'll than be going right about significant. we'll be that's little -- the a now cost My it and that. onetime $XXX What be is take put going Yes. Joe, you It's

you aside merger Then looking we about two the that at X. can there's acquisition do happens, put you let's nothing happens the that. So can because Then to, what July is -- that at go assume, look ways. we're on

I adjusted about nothing You only else. talk for And amortization, can basis. as at an intangible with when that I'm it adjust adjustment look speaking

to year way, going look first could accretive to is is at accretive as that then $X.XX. the significantly. you the immediately. almost If going full And be it be accretive acquisition as be It

the the we cost it year, accretive that after first we're $XX million, takeout, the think full should first accretive. tax be the full takeout basis, on a With for year, GAAP estimating the marginally

looking is is So at we combined what be? this if presented the XXXX of going At say at the billion. would the I way you're revenue -- pro-forma, look the to point, $X you

the probably do we a free the same FLIR first And you're 'XX will We'll at looking now. plus look on flow work at on year, you present then as for cash $X.X full in non-GAAP billion we I our If the terms business. it with agreement going in what onetime to they our in they're that debt-to-EBITDA, to costs excluding our say terms of incur debt because lenders, Only that net of agreed that basis. we're in -- have in revenue.

lay a have flow of we'll So cash table all free that out. of to

Thanks, guys.

Thanks, Joe.

Instructions] the of ahead. Andrew Buscaglia. next [Operator line question go Please comes Our from

Morning, guys.

Andrew. morning, Good

on, soft I expand you but segments, believe margins I basis stand wanted a be and that for a take? ask XXX to you initial about sort of last still points you of kind year's quarter, of to do walked provided couple through by this target

Well, improvement? Okay. soft basis it a XXX you target, said points was

onetime us, deliver charges, than I that. I think again, stand-alone better for were as company, to which happen. -- excluding we'll a going any

in XXX I about our XXX XXXX basis XXXX. think versus improve points to margin should

Okay.

Biden outlook But be XXXX. -- that given that's Have quarter has Broadly, your a your like Okay. or sounds bit you your fruition. more some you coming that? it And business. I around still to guess, for now sounded last into thought beyond much guess, what's expectations defense legs and I then administration defense not the great Robert, little last -- time would

interesting. very it's Well,

think, they side. with, don't long-term up. affect And situation all taxes be is up. made of the to and are would I were programs because -- going to which I world say to course, interest And I soft on directors -- other be have stable. defense. large, yesterday, democratic areas, we they as things, that obviously, want agree we in all an as they against going that defense space hit course, appear being been One don't think can of to today, be defense are spending be critical that about will administrations have including defense it which by will observation is they the healthy. with go on That's very us, went infrared of programs if corporations if rates And There our

And M&A one, FLIR, potential this guys this one? you know with last you really And off out M&A Okay. the a FLIR might that but you into pre-FLIR. table completely outside of there, year your sounded be little this hands year, is about full excited but digest I got until

If Yes would I something we we along, and we amount But this are that capacity, is do have have never We came -- don't the can likely be $X to busy we attractive it not at of being while spend. going we almost say work I billion no. really table. have. integrating. could the this would in at M&A mentioned, time the because as as and off another I it's would we thought time as

do one Now the small talk we if yes, of we businesses, tuck other it's to away it. bolt-on into -- on that hand, a our can

Okay, thank you.

no have in we queue. questions further time, this At

call, our conference Thank you, Jason ask now to William. please. conclude I'll

send numbers you again, for questions, course, on the are call should speak. And note joining give feel to news Thank great. my of Robert. information, everyone, time you, if be me us William, please, free morning. set do would website. available And could a Thanks, this there, thanks, Thank follow-up me that please our the everyone. you. replay have or a releases All to to you up

for Ladies XX available and through a.m. gentlemen, this conference replay today XX. will be after February

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