Teledyne Technologies (TDY) 28 Apr 212021 Q1 Earnings call transcript

Ladies and gentlemen, thank you for standing by. And welcome to the Teledyne first quarter earnings call. At this time, all participants are in a listen-only mode. Later, we will have a question-and-answer session. Instructions will be given at that time. reminder, is a recorded. As Instructions] today's being call [Operator conference to the I like our over would now turn to VanWees. host, Jason Please ahead. go

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

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

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

Here's Robert.

of Thank the call. of began and achieved with related you you best and morning share expenses despite or operating a FLIR. earnings, quarter acquisition these company's in to incurring We history. first results sales, Furthermore, cash per XXXX GAAP our joining flow Jason margin good the million $X.XX for and earnings thank we pending $XX

charges, basis flow nonrecurring earnings compared nearly last XXX cash points these Excluding free increased XX.X% Operating our to year. increased and margin doubled.

business The our increased of now performance very in the our aerospace, which X% across sales is Year-over-year business short our category total am of commercial with financial I addition, sales. is commercial in pleased except In nearly digital cycle recovery a every of all-time businesses quarter, in growing X.XXX, major only orders, Teledyne. also with quarter-end backlog in segment. strongest both in cases, $X.X government performing book-to-bill billion. within record And first we nicely. and received well of imaging approximately our our Also unfolding are the resulting breadth

strong the total company forecasted now imaging, led first a about approximately to Given in the reasonable now, X%, quarter, respect think by FLIR. with our excluding we digital in And organic XX% growth is XXXX growth FLIR sales outlook acquisition. of for

last the while increased, importantly, few Teledyne on multiple in-person owned access progressively several of months, covering performed all Over XX% we certainty transaction granted the were sites, Most to occasions. also visits FLIR excited manufacturing key functional people, as the part outstanding. operating FLIR summarize, areas. about the and technology family. I products, all management even of Teledyne now in are FLIR's prospect more To am

Regarding timing, to pending early we votes stockholder respective expect And Thursday, close are for XX. morning. approval, following our the scheduled May

our $XX Assuming confident than pretax We as update immediate closing in segments. continue include the the to greater. EPS XXXX planned, we to four with of occurs our outlook accretion basis business excluding and remain release of and on expect million comment FLIR. performance substantially we earnings greater synergies accretion, EPS even annual being will in now on Al Al? GAAP amortization a July expect

of flame year. the you increased the systems measurement detection categories of in in X.X% our X.X% most environmental In the versus quarter. and instrumentation Robert. X.X% resulting organic year-over-year increased increased increased growth from and with instruments overall sales marine segment, strongest our Sales test from of gas Sales product electronic year. last products Sales XXXX. Thank instrumentation Sales last decreased acquired year-over-year. quarter first X% of

aggressive business basis cost management to stabilization to operating Overall, segment our and profit simplification increased instruments initiatives. points and XXX operating margin However due increased XX.X%.

segment. imaging Turning to digital

of margin X.X%. year-over-year. XXX was an XX.X%, increased operating points sales quarter basis First increase GAAP segment

Now, segment. electronics defense the turning to aerospace and

products. aerospace greater manufacturing first products. operating XX.X% compared increased points the will and margin revenue as systems call declined over additional in well X.X% with X,XXX more operating of electronic sales were last second engineered year. sales services In and the manufacturing XXX decline year greater XXXX to to who segment, than by sales basis commercial other will X.X% the XX.X% as offset Segment margin turn to programs XXXX. quarter basis points segment full from regarding as I commentary Sue, our X.X%, versus offer quarter GAAP increased in increased now some defense the when defense quarter due outlook. First sales primarily

of cash Record period compared in flow activities million, quarter in will the with flow, quarter of million In cash and $XX.X same million the XXXX. and I operating from activities expenditures, for is everyone. Thank cash I first compared with operating financials year capital will that the cash first Al for and quarter was our by discuss $XX.X good the additional XXXX $XXX.X first Al full morning free second was quarter, flow million and some less covered $XXX.X of first Robert you XXXX. discuss then not outlook. quarter XXXX from

the net for included less the $X.X compared cash quarter debt compared billion same after-tax of $XX.X to debt expense of million XXXX. fund and cash quarter Capital flow debt $X.XX to the cash million We XXXX, $XX.X period at consideration to the period same the and for of million to quarter $XXX.X XXXX were XXXX. the and debt. of related portion X, incurred balances Excluding $XX.X XXXX payments million. was of approximately $X.X approximately is for with option the first the was Depreciation expense million transaction, ended The in Stock That the $X.XX the billion. cash for of FLIR acquisition. cash proceeds the free for of first quarter was XXXX. first amortization expenditures million April of $X.X million higher compensation LFIR first of both quarter,

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

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

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

[Operator Instructions].

Our Please of first is Konrad going from Jefferies. come line go from question the Greg ahead. to

morning. Good

morning Good Greg.

before seems and instrumentation to margins just it I Maybe get a start engineered lift full like in I mean on year. to systems.

quarter. that us update out on year? ahead maybe last for of your just you the laid Can guidance you You are probably well running on thoughts margins the organic

cycle a primarily how the Yes. Greg, instrumentation, the we sure about year, business, we probably not because revenue were we started much have. and therefore when it's short would margins

about think increase going projected the now margins XX to margin be of of the basis basis are we points. about for improvement points. XXX closer is to points which XXX an basis We So year,

second engines in finish because to mentioned. the had you strong the first one, turbine we first due that quarter, that were of engineered which systems our to production primarily all is that cycle Moving We shipped quarter. very a

over the about margins XXX rest for basis think increase experienced. year the about XX% the this XX.X%. healthy primarily year margins the segment normally points to Currently, because were first of quarter, closer improvement. to XX this would margins point overall XX.X% has We basis up our of were So initially to with a the projecting for we that moderating business

I about. think asked those are the two areas that you

synergies of into over that then you term synergies, guys mentioned helpful. just XX% as maybe or the update any revenue mean visited diligence think of surprising you close? That's about potential the if we have the the anything some continue sites. I And FLIR you longer when

revenue be thing which as looked are haven't visits the synergies, the operating in synergies were in the think that important have savings out we quality our that savings I primarily first procurement methodology, and We million of time. the reductions in the growing to the over using as well million operations been found the year and yet $XX our people. operations well, that most of we expect have focused we the by some earlier the year of really Greg, enjoy this and own used we at area, Well, of the the in cost as last same cost mentioned that year us vis-à-vis such for we to some supposed substantial to $XX on have

synergies this So be time. those at would the

that markets. There In terms in how where closely. to jointly would we do of frankly, we can't at operate very complementary are revenue really products. we different quickly And in areas things team market have obviously looked haven't we look be, go synergies, at we very

were you that number, will ex-amortization and and continue large any assuming presented accretive on, updated thoughts I remember of that's just then going that at into adjusted I the And kind mean numbers fairly am there back gave But this forward. eXv, get us last next because you least to as did to I not if year? quarter be going presenting one. expenses just probably you even given it's

Yes.

need be, substantial, really were there I think to the EPS accretion, because we improved it partially margins.

said that in one-time of hand, For substantial as we XX% and which costs accretion would about think FLIR we have other be more. exclude XXXX or should the we on the you intangibles, that if will, EPS we

savings One for the course, substantial. the The excluding Of reason again, what mentioned. intangibles, twofold. is I which that is is

and revenue that they margin. XX.X% a margins The in GAAP those other on after were in very basis is, to year's their a had operating earnings of margins, costs one-time us last is even XXXX, healthy all which

is And would if accretion, quarter we ex-intangibles. XX.X% improve substantial know, you obviously this been As good. then up XX.X%. we very get to But can have we that,

Thank you.

you Greg. Thank

Research. next, Gendron to Please ahead. the then we going from Wolfe to line of And you. go Blake go are Thank

your synergies versus there maybe when I entities? two working maybe just but want so the here a revenue the for can about overlap. question, not in focused there Thanks standalone on to supply chain cost any combine free follow-up basis we Yes. on cash way synergy you terms this on capital of think incremental Is or time conversion much morning.

Yes.

inventory exclude charges rest what we to elevated for built charges Having year, on from I one-time partially good temperature be. area a this don't we I at enjoyed. think, have that, again, some XXX%. The handle do the because in while that up on and handle FLIR, FLIR's overall be the have the was skin XXXX, what they substantial than our really would going because the I XXXX properly, time of saw said we one programs and charges better is think to have the Blake, at the to of conversion

that it. to But to have that may And write look that have write So we $XXX to get free built those $XXX slightly that was areas inventory we last they We have and have we And to at surpasses up in we down. should some overall, our up. carefully. cash significant may as a have But flow us other year at year those projections very a see record will million. are ourselves year. million, for last we

the important, Blake, So very as if we do and cash because we our as two pay we can that that's over down fast next well FLIR debt exceed the possibly ourselves to flow, can years. with intend

digital switch really to That's gears helpful to color. I wanted imaging.

of out called improve. some hospital in scientific Because we specifically include the short industrial, You that Does cycle are and markets, seeing healthcare? geospatial. strength volumes

in wondering if move And to then, longer aero as vaccine go to wondering over and very medium an small we here term? incremental normalization? I a to but and expect that rollout digital that to the evolve am you tailwind could commercial how So into imaging be forward

we start the a year-over-year, to $XXX million from see to in XXXX me some last X-ray over XX.X% for about decrease million. and that our million. starting XXXX, to about supply panels year approximately year, had are of would we between the of sources, $XXX This revenue we some Healthcare, we an well Let anticipate $XXX to have healthcare. X-ray with equipment improvement we as increase that CMOS as X%

that the a recovery So kind really it flat domain, anticipated still lagging the slower that in more than good with a kind coming displays some of but sources We is we but X-ray said. getting The there. in is just what little you little up. bit speaks of to panel orders

systems. Commercial digital Going back to imaging, commercial in the first it's regular, question the aero small. vis-à-vis

domain, year in we see imaging improvement aerospace and revenue defense the in anything space And any our not primarily digital this year there it's we deterioration different It's about have will think on that this to to seen we $XXX from than Second,, we think that It's actually airline $XXX dependent and million in that domain. not X% maybe million on a year. last traffic. else.

area defense only aerospace aerospace that domain. the punishment the aerospace we of in and some normal is So in businesses are Teledyne's taking

answers. appreciate really Thanks Makes time. sense. I for the the

Sure Blake.

to Then the will next, go Needham of Jim Company. we Ricchiuti you. & go Thank line ahead. Please from

Hi. Good morning.

questions. of couple a Just

where a look out you the stronger of in to you of fact the that just am Just, like parts I coming imaging profile as year, different margin the healthcare you most see you expansion business. for little sounds in instrumentation of related do half into better. have margin digital the the seen It the on, second business margins units? with wondering, opportunity look are, you bit

Yes.

year. continue If you those margin did in first the test have measurement and go to quarter. we in the we expect and the to some improvements instrumentation, environmental And of in significant rest for

mentioned, margin catch also. and rest somewhat. was some also in that as improvement businesses, the as year the margin's the had there revenue will in will does, though even marine Al of improve think We the down the We revenue

So we best overall area, about we have the instrumentation, environmental in margins think XX%.

measurement, margins our over is test Second XX%. best XX%. approaching in marine and And over

you we up expect think when roll the for going if year. XXX So of we the get why us, to since as really then currently. prices close of I think be our for because to If in it oil instrumentation. basis margins points improved do to I to going I especially $XX outlook has about segment That's And all going healthy that improves, are well. that's going that January XX.X% said, marine to this is up,

chain seeing about all the with this, respond component from well-publicized business guys disruption you to Robert, this? you and the constraints maybe to able Al, reports of supply you to And in well want are any it. Or the are enough? Got manage

Both.

are critical have constraints, time. our that, affecting seeing said of buying are both It's thing boards. some having of approved do we printed components Teledyne businesses. effort we we of lot across have, There's as that, control in components our no of in though as obviously, even collaborative other electronics question our in First, And able In the Get time. of approach one delivering well tight Jim. we their of about because the suppliers fairly circuit for their as a customer. of But large forecasts that, very have we inventory, ahead putting is, and to the ahead procurement, Having of timelines now product our we all come that products orders customers. terms guys and wafers it. in for But the example, are also also wafers from that fortunate we getting we case, managing are who supplies because foundries, our are are that to we get. our said

really some So out then and But cautiously to other in areas, thing okay. areas, can deal it we be with going are In am optimistic. will I we very spin control we this to again. have of think

Yes.

Okay.

the are out of you the year, accelerating business? that growth areas suggested I and number business you way thank So about the am and quarter recent that last for do question, be your for see nice businesses next last just you weaker question, call in and characterizing growth that the to filings as I the to that. the have seems am assume you backlog think and acceleration just we out? for Yes, if of I bookings recovered, just wondering the the where which but wondering can potential else anything and there's some been looking

digital primary I think areas our imaging. is

to organically if like For ever me to digital going I something imaging don't grow say is have done I know that. year-over-year, XX%

I to of pretty bullish that. feel kind So predict

of a end book-to-bill will the digital year X.XX. I imaging maybe X.XX, think in with we

area. So first that's our

we think, If lot right marine as one. if expect, other we the in a much that is back And short another and But cycle back back, think comes specially expect that be the in as X% measurement, and area, comes instrumentation as could environmental growth, X%. in we areas test we have over of marine X.X%. as X%, would are now I come businesses. we

think us X.X%, I overall, X.X% the So about year. should for instrumentation give

that's come those much businesses two really year-over-year. to would very because don't flat okay. probably Engineered businesses. our doing good that We are aerospace back be year highest For again year. systems, But It's cycle. I this the fairly a expect defense us think margin are

and combined in improvement past. year. Roll the all going be this in to the organic I enjoy of our you end in together So that aerospace revenue a anticipate up X% would for to with revenue rates defense X% are which and of one of about recent growth company, healthier

Thank very helpful. That's Okay. you.

Jim. you Thank

going are go to the go line from we of next, Please then And Joe to Giordano ahead. Cowen.

morning. Hi everyone. Good

Joe. morning Good

about some and thinking the on from Yes, are semiconductor of there? more color are given of I I strength manufacturers? about curious talk and sustainability just some the your you test the for how know But and plans large just measurement the wanted to R&D of side. you there

let Well, year primarily because able measurement, really test good put We start continuously. and there. and me products of measurement, to enjoyed a new out being in test

As that focus two we there. on we areas you know, have

the them other rules communicate are is oscilloscopes. is that of One chips And protocols which our one another. with the

put three to to businesses, been have those alone, Like is products products oscilloscopes in products what marry But we continue last week do announced those We together. guys two and two more able new importantly, our protocols. out.

do using to analysis observation time the area. the be real for development So that and going protocol oscilloscopes as signals. of people very now And can good that's

includes systems, as panel to us. displays revenue well to about about You we growth. for year-over-year a wafer the mask where that If I In look market. also at anticipate as our be semi. on vision market growth digital semi flat inspection, good inspection, in XX% which primarily XX% as really imaging asked that's we focus and been semi there is me And

digital out relevant hair We used that then in semiconductor done to would for a market and wonderful eight for comes kind are extreme of so doing inches thin, thickness speaks customer And of product one-tenth essentially These lithography well wafers that now imaging really why markets example do which a are They them. pellicles very are are fine screens captured area, and in have we have point of well our lastly, have and that. very six have MEMS protect diameter in UV but in are I one foundry that human off Canada. that we So below that for a And products consumable there. semiconductors. us. the that

overall, the talked semi, measurement, question, are that your them products in the so supply well. I about. to pretty test And And doing and answer we to

And And now to you you to cover just asked your that to much going other to ability you that in your already to on. and your are as How additional get the follow historically? there, question ability the to their up on ability do over taking one comfortable operations as you with FLIR's source that smoothly of that need well be scarcity do source as about own? covered able components

Jim, answer and they to are using. have But The see is, do that I said yet. they that, inventory to I substantial we what mentioned, because into dig obviously having don't have know as

think to would area that we our to I have be right it. will now procurement an that bring

both hand, the they also other cooled and also lot their own sensors, make FLIR a and on the On of side. uncooled wafers the gets

we challenges. alright. as in with the in just that cooled uncooled, having antimonide challenges some specially all the would of that So we haven't it up some VOx developments, deal deal should I business. can come those of can said with we deeply. We the and enjoy for our doing that anticipate like we just will as that, the wafers at think looked be and having long It But as But there for as we enjoy long

you. Thank

you Thank Joe.

Instructions]. [Operator

Please Capital the line Andrew of Next, Berenberg from we to go Buscaglia go will ahead. Markets.

morning Good guys.

Andrew. morning Good

start don't or talk just And segments. you know you believe gave a about calling XX% least where don't at really hoping there. little any believe you digital year. for was full to subcomponent I bit the the which a margins had to imaging of so of about, couple a the are you clarify, could then I the imaging, up? strong I for the year digital talked talked A&D I electronics for you about

So your what's there? kind of margins on the outlook

Okay.

me should Let start think we the about imaging margins points well. up basis now, go with margins, XXX year over Right last digital please.

Aerospace So have just significant of XX%, defense, to going XX%. margin we north say and let's are improvement.

really in going the systems had charges we to but year mentioned, first in XX.X%, good approaching that, last to year. we XXX partially because Al be going the nevertheless, improvement aerospace flat. uptick As over last having think a would we XX.X%, had one-time be our said maybe points basis relatively are be Engineered which quarter, margins

we XX.X% if the in all would was XX%. take it So it I the think mentioned bring I which margin you down, we the thought and operating that mentioned instruments margin, way be January about before, company that

company Now, we to XX.X%. operating for total year the margin to the closer are be projecting

Okay.

all question. that this But don't I your answered is of to anything with I do has whether your FLIR. call, excluding, know of course, of the acquisition

you And there. year. I that had growth X% about the for what digital some are think saying? imaging, for subcomponent XX%, you closer But now to I Is gave is the called top-end, you know outlook

all our else cameras, everything going The Yes. And is is scientific It's to to display, sensors, to XX% et there growing including only cameras, mentioned led flat year-over-year maybe our be flat well. way vision Everything well. do geospatial. semi for I closer really as products, seems cetera. panel by that

to get midpoint can't elevated of line, guess with assume I I I some have line back? might it midpoint the then the your interest items? we And that was the a bit think And flat your back we a the below Secondly to should having to guide to we am Okay. be of little costs how do got some modeling the really transaction guide. add getting I lastly, be, in quarter. add up. guess, of this expense difficulty just you

transaction that costs. Well, Sue you guidance that the the excludes look $XX up if provided, FLIR's to $XX.XX,

of expenses as to as legal at FLIR you line. the acquisition expenses excluding look interest to have to So have that the related come time, some above this well you at it that the look at

acquire we the assuming will would was and is, that bankers. once of for Now, write-ups we be as what But the forward in one-time some $XX for are which we other have company our and of Having of do and shareholders and said the put of all some it line as will be we and talked we moving inventory quarter had the intangibles. transaction, interest the million $XX normal excludes other it approve of the FLIR, And was or fees fees first $XX.XX legal GAAP. cost costs the that total the FLIR the interest bonds to substantial. million redeeming that, are to were things. the also the then part million. also transaction costs with to getting $X.X be we charges going there in associated which be call earlier, would outstanding. the going $XX above already rest was Later Those on transaction to those bonds about about

answers I So own April, as earnings. this we about to happen more a July, do what stands that up looking question. Come hope clean FLIR, alone, them in are as and say kind will it. did do we their how Teledyne of expect your at learn we there, What we we lot they will

earlier, think in we be project would credit, will basis going and we the to then it's on And I X. May mentioned XXXX. a GAAP one-time it's be with without the combined like even company And costs. think what a as I

had the about on defense seems about which Robert, the would hoping, you more you XX% learn CAGR. assets in on the maybe could that It was you quality technology that more those as I hadn't their In a business something lot a you FLIR transpired S-X, growth and And more it. sign to-date? the thing. about people. is just one for for the segment was Are will of some talking that company are of that the projections Got like internal company, projection color of off provide little defense there

Yes.

S-X. be may for should with if a We that Andrew, I little How precaution. way a segment. them have it? and are start, their aggressive the put bit were in now the the they projections little said two at reported may segments, me which is than Let segment little little concerned a the I differently the looked we Having that, defense a businesses industrial into

they divisions. have Andrew businesses gone fixed We division in a XXXX way perspective from at were the were back, the which of and looked

gone you good defense we question enough to enough have were the to added and data So then come to am back the things and they provide in divisions. I new fortunately us it. And they have with kind And to those asked. going two financial that

stable. of vision they order they One fairly business. small part business them million. that is a It's components as of which a Canada, Point report small products business Grey, that bought is And in their of the of $XX

$XXX from unmanned if have And go acquisition that they to part has and the $XX well but to new years, business the in way the primarily small have good will over some eight ground-based that million starting And unmanned some this business, temperature unmanned UAVs. area you their would XXXX, defense think that about revenue now we do mentioned, that year it time. or grow your both are of best will business also And that now is they growth, both they am that's our to have think detriment because think, detriment million the I enjoyed systems, and I defense which they it million, the UAV enjoyed in enough maybe that I the and they down perspective. is see grow I businesses the ground-based $XXX system. look they as I whatever. hoping really good than last so one reading from way Prox makes go in that's we makeup they acquisitions next segment know that the it Having of of down will we provided, going segment, answered way so you EST up question grow. look which Now it divisions The that, don't and we elevated skin significantly at that the And have new, I it. fully coming really kind are hoping at of, for look to because in is that I at kicking are make just have less if products Dynamics, have business. the can very acquisitions said in at That made which XXXX the that, with mentioned, UAVs. those made an the in has I

helpful. No, Thank you. it's

Thank you Andrew.

And no at questions have queue. this time, I in further

Sean. Jason our ask conclude call. will conference I you Jason? VanWees Thank to now

Thanks everyone call Robert. this thanks for joining morning. And again to the

Of the have to bye. I at for on end everyone, free Good and follow-up could the you provide me details course, if the it. if replay you the earnings please call number release. feel Sean, would call questions, appreciate

AM Ladies you. through today's Thank be replay today and gentlemen, call available X/XX/XXXX. will XX:XX Yes. after for

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