Teledyne Technologies (TDY) 27 Apr 222022 Q1 Earnings call transcript

Ladies and gentlemen, we'd like to thank you for standing by, and welcome to the Teledyne First Quarter Earnings Call of 2022. [Operator Instructions] And as a reminder, today's call will be recorded. I would now like to turn the conference over to our facilitator, Mr. Jason VanWees. Please go ahead, sir.

Steve. you, Thank VanWees, to Jason Earnings of and Teledyne, Conference This everyone Vice to like welcome XXXX Teledyne's I'd Call. is Chairman First Release Quarter morning We the earlier our this released market earnings opened. before

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

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

Robert. is Here

morning, share. to -- began Thank our in and first greatest good and XXXX, operating price company's began earnings point, at adjusted November $X call of spin-off today margin everyone, our you, XXXX, which earnings our XXth approximately stock with the was We since Jason, began our a [ph] in we we quarter sales, history.

that longer-cycle currency well-balanced both and quarter X.X%, and total instrumentation operational GAAP business for and Both in in typically with and remain Our systems, of markets approximately and and quarter first across XXXX businesses. last share also growth records. businesses non-GAAP non-GAAP and per our translation robust, XX%. backlog related businesses to acquired industrial GAAP But commercial first instrumentation geographies. compared emphasize We which appear exceptionally headwind. XXX orders from our test sensors sales our foreign of benefit achieved quarter, in were a increased measurement tax these from weak portfolio our to our very to results. marine increased doubled results want in earnings even considerably earnings asset the and exclude a matters, it FLIR Sales I organic imaging intangible grew. also the short-cycle Demand large earnings year only imaging aerospace and execution tax reflect for GAAP electronic earnings exactly basis continue amortization. non-GAAP excluded first record points only and end including throughout was resulting

was First, in XXXX. future significant second X.Xx our quarter. and to quarter; May lower third, in reflected than in payments year, last following the over in second, compensation made While flow only the incentive quarter annual the derisk These of the in transaction million X.Xx third the repeated be immediately will not free paid again, guidance: be only revenue periods. of it investment Nevertheless, from and cash $XX first a will after bond made interest leverage declined FLIR in first quarter; items to inventory in the ratio

XX.X, and devices. XX.X% environmental overall protocol XX about asset improved product last X.X% over increased point equates X% of businesses from drug year, offset for equal marine the Even from to systems, the increased for to of our The X% $X which than year markets, outlook. to X% measurement translation Sales underwater slightly chain sales in due to favorable. greater from across discovery just autonomous growth with full Turning with sales and our billion defense Instrumentation first communicated also environment but revenue full profit lower our $X.X organic less XXXX XX.X% increasing to in contribution, increased operating than for In total billion January. a test this expectation the of segment, or increasing few Coupled sales year we headwind, year in FLIR, Instrumentation instrumentation roughly our demand to overall are supply by XXX detection flat and and currency but Sales Overall, constraints approximately points, were greater as include electronic industrial acquisition. very sales businesses imaging compared increased certain largely sales growth and vehicles growth segment, health segment vision to to margin both consensus. and low levels. versus oscilloscopes laboratory strong on energy adjusted last current organically or our Sales year. high asset due for analyzers, XX.X%. of further dose gas operating year. the very amortization, performance GAAP x-ray basis segment and margin were combined as quarter year-over-year strongest was was our segments. FLIR well detectives. at government strong But Digital with record for X.X% industrial the applications. excluding XX.X% digital business XXX of of with I was human resolution systems, quarter quarter intangible was also and sales increased record segment, sensors commercial Sales amortization. now intangible Imaging to the commercial and basis last our operating in will In organic first instruments basis comment XXX%, points our remain GAAP margin first oceanography

X.X% than points Aerospace greater sales commercial XXX industrial aerospace in our increased and Defense on based by in increase GAAP year. to Electronic growth segment, than products. first combined with sales segment profit defense of greater last quarter margin Moving driven basis modest XX% with operating sales XX.X% increased

margin segment, the higher due business, but since we and decreased our X.X% especially profit revenue first System margin exited last in to quarter year. declined turbine operating missile of the sales, first engine lower and quarter Engineered cruise Finally, following

U.S. agreement turning of call to concluding this at FLIR it to has be has component our always will the now third-party Compliance culture But the and Teledyne Department fulfilled beyond moved couple numerous Before of of I wanted cost always burden and and Effective been with over successfully just audits. week, of a the extra terms remarks. of Teledyne. make Sue, State. FLIR the consent the critical investigations

global our regarding months, sales, backlog declined approximately which six that and increased. sales defense defense Teledyne of slightly represents including Finally, year-over-year total over also FLIR, the last of XX% our business,

However, period. but budgets, growth more has for opportunities than defense commercial Creating by our this across with Teledyne sales defense the offset outlook was very is limiting U.S. now strong NATO general But for greater decelerates the future risk changed. company. for sales, also in orders and economic and firmer the

may the the years While sense most. in the benefit future improvement

of benefit turn qualified the second expect and especially is will where order XXXX. We to are call process. half commercially which we nevertheless a seeing the only now of true over an FLIR for bookings they some I require as derived, Teledyne increase in to products, appropriations military purchase portfolio, near-term opposed a are but business to opportunities, This lengthy the Sue.

period a everyone. Depreciation Swedish a operating Capital related not cash Sweden. Robert were quarter issued of $XX.X the to million million billion disputed of discuss million for cash first the million. compared Adjusted is FLIR net subsidiary from quarter period of flow was with and less XXXX outlook. $XX.X covered $XX.X approximately $XX $XXX.X discuss flow cash We $X.XX year operating Robert, amortization flow a pre-acquisition for and expenditures, of million good some to authority first of from XXXX. $XXX.X onetime $XXX.X by with less first of to compared debt. excludes to quarter of XXXX was The our million In you, expenditures for XXXX. that free XXXX cash same cash That the I was Thank flow, expense XXXX. to and in $X.XX tax $XXX.X in second $XX.X cash compared in the quarter activities ended capital in I and million is the first tax million for the will quarter XXXX. in the approximately quarter, morning adjusted million with million billion first same payment will $XX.X activities of the reassessment quarter then debt, additional compared adjusted of financials full the XXXX

stock XXXX. same $X.X for Our quarter in expense of million compensation XXXX of first the $X.X million the was period compared to

Turning range to per XXXX earnings to share earnings the range in will that of $X.XX the currently $X.XX. with Management quarter in of of be second to in $X.XX GAAP the believes our $X.XX non-GAAP outlook. per share

at outlook of now tax XX.X%. to estimated rate, Robert. XXXX we pass For the prior the to midpoint XXXX, our share increase January. be $XX.XX discrete expected our is basis, that The latter $XX.XX year to is non-GAAP I'll to back $XX.XX full full GAAP outlook to provided a to and excluding year items, earnings call in an being The $XX. per $XX.XX on the $XX

we'd Sue. you, questions. Thank take And to operator, like

with you're ahead. questions-and-answers, If please go proceed ready the to

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

Good morning.

Greg. Good morning,

seems maybe about the the to the this little appreciate announced in change some year. be greedy, dynamics it on more EPS might bit slightly a Can with And the a maybe of But I growth talk maybe of what a maybe then chain, like the nature you that outlook you organic up supply sounded morning offsets for you there? minimal took volume. This better quite maybe the like forecasting. given the and bit conservative comments

I What don't it? Greg. call know, Greedy? did you

though. part, that on Greedy

know, we're is still worried now, about are Supply no chain managed difficult. we we're are Right them as when will issues, frankly, you uncertain. is that inflation, which managing No, a There and conservative as successfully them here, while certainty have is, change. company. sitting

in said it to that, think organic said expect grow. – about having revenue I we was January, It So I X.X% was growth.

indicating to because shutdowns there's be of that, there. or on is uncertainty. said little deliver have war kind the what in the to can the this and be inflation, from And more. a the know there's Now go chain, There's with much focus supply having there's time China. I'm There's Europe. conservative, X% the the to too Nevertheless maybe is information. we not time we in This we

if that. I answer that's So my Greg, not? don't helps, or that know to

just of look little at were digital today? with maybe margins imaging a helpful. the fell the by and bit When for of the the you're what maybe us year of for segments That's outlook expectations, expecting margin, I on And then, quarter. Can you least level mean, the just short. ahead kind segment set Yes. our outlook well of kind baselining I some at the

Sure.

start digital Let's imaging. with

For the be full combine That's the year, XXXX. will to think and slightly about and year XXXX, was together, FLIR less digital full what full full legacy it Teledyne. year, year We for in going it imaging XX.X%. I'm than

higher pay January, would because do primarily number, issues XX.X%. we that when in a it think little were chain components about we prices be we experiencing a that. we are there, We having thought But closer need. supply better is to now plus we're more the Now to we find present XX.X% some

Moving about now to segment. I to that because basis points in that Instrumentation and January, note from that be the test we're have margin XX.X%. protocol, increasing tailwind and XX.X%, the In XX measurement, of the we We're would that it XX.X% oscilloscopes mentioned increasing by margin.

and we XXX Aerospace and Defense, from we January. increase we projected XX.X%, In of what XX%. to grow margin almost January, to margin Moving expect the in projected to basis expect points a substantially we to it

to On we and and Engineered which than XX.X%. it's expect Systems at be what of margins businesses, January million, in in expected primarily the end flip side, government about revenue our has segment, we $XXX lower

to for that you And all the be Right company margin of in all cetera, expense, XX.X%. up segment. that And XX.X%. be the so helps, for then combined when corporate put the I et total hope you would Greg. we're margin now, the segments roll expecting

what quantify long-term tailwinds prior going what what thinking thought terms Teledyne. sneak you're you worried of as just of kind and bringing maybe today? And and defense mentioned of maybe overall And budget NATO at think going kind of maybe in to in growth I'm one of opportunities. defense helpful. I the to defense the there then down of rate seeing mean, way people growth of in are one. at the one I That's point, some increased forward you're kind rate about the last Is any you post

Okay.

start of our saw from portfolio we QX with me in And experience defense Let most QX. some came decreased Teledyne of Overall, last FLIR. in year, that across X.X%. about

But turnaround sales end mid-single which a the so, Now in X.X% having negative our be in decrease Europe if longer have, X.X% backlog, for though FLIR demand sales. that. products defense of businesses. examples give say, we've XXXX. take you seeing that significant is opportunities, defense said to, seeing that the board our let's well real X% think that go reason XXXX as on kind term, that, FMS and the I the chewed the the FLIR as likely digits, businesses, I of you away is, in we're would while or that say and of both especially in we're not can Teledyne XXXX we or And And should across we at

directly in result them the because conflict the nature of some of of a are coming that them are, the budgets of course, of Some and Ukraine increased alike.

you. Thank

Thank you, Greg.

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

you're you are way Hi, focused forward? thank well. about in anything guys mainly I'm thinking I'm commercial on you made, about Good inorganic building thinking up defense comments opportunities morning. you. that M&A just have Robert, in are quite the changed of differently But as years, and think the longer-term you business, you you've the just wondering, about going light the has over done portfolio, just Teledyne in – the wondering, is you

morning Okay. Jim, good you. to

an absorber. down look and you that and the let down, way of and look our back significant inflation at negative, up Teledyne it have a very about it FLIR the like world. caused at When we that is have commercial businesses across to conflicts like a we go they things go But XX% what's FLIR, we become about also about especially is defense, is And if First, shock way of and to other shock the up that, way portfolio have acts absorber. should think said say, me portfolio. see now which enjoy the for The I our are happening really having included, And serious of kind the of like part with it's defense. not products demand which you towards happening. I prudent And don't in we change commercial – our convinced, think think like our from have really because that I And think is we that been has And Teledyne businesses, with that products, our because primary very always of balance happened especially M&A. Having that strategy ready, opportunities change I should we the said our fruits growth that has more and to company say a perspective. it's to something there. that of be am or say that. we change portfolio I that, engine we for our

FLIR, it Having So on got And probably but M&A, business. we'll that, observed a and the substantial I It's said backlog, enjoy have margins had you think FLIR it's focus it, commercial we domain. really in defense in defense businesses. commercial good. the kind – but we of doesn't bought can is a predictable not

in I gross segments could And Thank in viewing you're on appreciate could I'm you strong you some if were quite in should and color it. thinking Got terms you But margins and moment going margins strength puts turn cost you wondering a be that. also, color mix forward. way provide for QX. there's the but gross which on for I of the the pressures, about obviously, were there? I of the the factors maybe elaborate the operating some year. also. if there the some biggest is for know And any the to on wonder that could we takes, of what margins, how

familiar very obviously you're Jim, Teledyne. with Yes.

historically XX.X% about Teledyne. FLIR, for FLIR, didn't time. did I'm Teledyne QX it margins other XX% us If FLIR the sorry. gross gross We XX%, at the have enjoys about the year, you last or was higher than our at hand, margins look legacy or on

XX.X%, from higher gross in quarter margins you combine we the company grew our commercial And together, up our and about moved said margins businesses our they because in margin XX% XX%. that's the our Aerospace enjoyed that, the measurement to of XX.X% because and two also in test Defense group. Having Instruments first significantly aerospace moved huge those business. in So when increase combined

then good a business, then commercial had our is portfolio a legacy businesses. significant gross turnaround experienced which than buying we our businesses. two So there's tailwinds: business Measurement margins Test record a and our now of revenue our and we one, really that part in aerospace higher or in enjoyed And that

that like from that hearing air, what fair In see least commercial from recovery at say? elsewhere. Is we're you presumably, from It – looks hearing continuing. to

we're some aircraft. because a lot for would But a we you We be only forward a what were trough, in say, remember Yes, year, of products. we I the quarter, lot aftermarket QX, so first also do are going we concern OEM of do the going QX. commercial do to in have little as products Last tougher comps encouraged. both a when

So we're encouraged.

Let me put that. it

jump queue. I’ll thanks. the Okay, back in

Jim. Thanks,

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

Hey, good morning guys.

Joe. Good morning,

the wanted for I in was know So, just with portfolio down. that defense FLIR start growth quarter. I to the rate the

overall was year-on-year. down So FLIR

play And Just were you months for with thinking like how can that how that you probably And has updated – maybe views portfolio you mid-single-digit on changed? year growth was XQ FLIR helpful the what that’s this overall loop out internally did if – like ago? your too. your segment, in to that organic three by relative growth want to

Sure.

business as well in declined is year-over-year. FLIR, Joe, the you’ve you As mentioned, FLIR, they know, defense

the declined segment They also that’s about with that but X% defense If year-over-year. business. Systems historical XX.X% year-over-year, our consistent went declined you own to about Engineered

in the businesses listening and pickup as should I’m the as quarters. defense say market the are the flat in Europe, because positive. defense were reason is seeing X%. of And that say, defense fourth businesses that opportunities overall this our to and well that said declined I week, X%. Some about this country. seeing overall QX, we plus the in third we in Both that, a going we’re FLIR their we’re the relatively in the Having be to primes that think and and

we side of skin they So, defense a the overall, about to In our also of that in year, with when went a year. had we in look existing but much, the elevated businesses decline you last in the will a well the products. at X.X% decline look they The little got did year, They FLIR, year yes, to compared commercial Systems first forward. did up which but And bit business is little you’ve Engineered goes their have not QX, last in a businesses. which other it now way, recover temperature commercial bit, had as specially had quarter. sales reasonably at

question, So the last in we up about if I you for FLIR business, think Teledyne all in will years. be year, – acquisition, a from over say, two historical [ph], should was total, commercial. highest the year, billion, combination the $X.XXX it expect Joe? be the go as what last defense for after X.XX% hope answers year-over-year I well about the rolled to revenue to to the the that That as FLIR, overall which I would of and

you. That’s on outlook be what’s full to is I just the what’s time of this because chain going year curious on in and helpful. effervescent was inflation. supply not like point Thank on your and with going

I fair. think totally that’s

If you portfolio, happen something the part? globally? all which of protected concerning businesses, you think most your the what’s look like at negative which is do your least Like if

I I don’t eventually guess, want because let know. But me say don’t this. I

of That’s why portfolio someone times shock just after get we at our from absorb uncertain, times. well. the the as have has that well. parts afterwards, – Right with not kinds if may it intentionally economies. as you things companies portfolio of when some various history, bad the our from market right We done buy deal things other works, When not our these it and look balanced happen, for

portfolio. I So, I our with comfortable say that would feel

to Street too And we want effervescent. can as We’re on be guiding we think we the deliver. the world what don’t

they On a might significant time, this this the as out see other sign a things if for a don’t M&A. Joe. warning bad coming are us with hand, good at be happening continue now We opportunity of

and Do test you Okay. And one. The strong gross at dollar just similar on a kind really measurement moderating we level? the rates about start last sustainable and if of growth stay How business? at I that one basis is again. that quick levels? on could that do How is think

going X.X%, quarter. going of gap the again, say good had with GAAP about year we earnings, be to net X%, even net our I’m Well, for growth though should such first team, growth, a

happen with last But better the weeks. even because by of the seeing three as China. an sell nobody the short-cycle that a to significant area orders, a way, well products amount business did are And forward comps three lockdowns to quarters what’s knows And last the we we We’re going of pretty tougher we in year. that’s be it’s last the move and there. going

January how So, with I X% now to that our increased on. let’s goes a for We from, as from we’ve outlook would things bit stay say, to evolve little X.X%. time say, see

Thanks guys.

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

Hey morning guys. good

Andrew. morning, Good

it’s that? referencing – are Or So, was you those kind is and make programs you positive bit of and record give awards what definitely big comments, specifically were hoping you always an sound has longer-term of into potential more or Systems can their on these said? opportunities the are after growth. I about other which things kind positive – specifically defense of Are color specifically, talked obviously but the those nature could a FLIR, like very on you there maybe too. when they Unmanned of big business, FLIR more they And little saw source these you area was you with a of government any small, add commentary, business,

Yes.

comment Let of legacy the programs systems record. me first on and long-term

that happen. has will happened, of Some

in mile, you environment. performing size, silent, is, a go Black said course, Having systems. GPS-denied systems, range unmanned I’m there Hornet. to Sensor you as a opportunities the there’s X there it, inches the so mentioned know, previous Borne same management in well sure, Black Some about move through because of Soldier air, come And of when very don’t I lens as if significant the you are Hornet that, the and look X, back of did. not is the which

and interest in real very well. doing seeing We’re that, that’s

videos On PackBots well. them, being war. the doing trained very we [indiscernible] systems, Actually, really the forces saw we flip on side, they’re have, well. our some the are they’re Ukraine, we Ukrainan the in doing used before that by In are the grant used some and of that

on actually new them Ukraine’s were Kiev. new are helicopters in the of Some

Our IR sensors sensors drones, we’re of to the of manufacturers. going on also top that various drone lot all unmanned across our for just And go of demand those. seeing but systems not for a

also programs. We have, in the longer term, said, as you

coming carry if you an assignment, got also a as We Switchblade. an flight of drone. you has interesting It’s bit capability. which to able it within little can vertical really has words If seconds you two kilometers. strong program drone. XX of a last you have year. said. That real is bring opportunity, what for It’s back. opportunities stages It’s XX-minute record record, and revenue achieve of the go the we munitions. wave the landing and a that get kind It the larger do prototyping, a in should That’s That drone, by a be, would final some can program to achieve be can It’s it time with out of if that winner. takeoff would wave like recoverable. to and It we of the known drone the end be off has we is to

it’s is now term, but is like and future what all into plan can not. get opportunity when long that said that in certified hedge akin an eggs recognize something your important can helps don’t that, of the don’t not that flying. Having about then or I think that now can what what we to in that and the I get of on you we we whether that, record And like programs to getting to you focus that easy. enjoy of that’s I sell know when over So, all basket. think for

the I kind agreement this Can with in sounds very No, that remind forget at we news that? this of too, just maybe No, It is impact synergy you quarter could where is the included us consent FLIR And and if away. point? stand your other annual encouraging. the helpful. estimate going is comment, from of synergies like you sounds

total expenses of the and ended in it Yes. some at we that QX. started quarter. XXXX. in then And was We That FLIR It for of this Teledyne the order $XX-some cost million. had successfully

FLIR government to into also that million, able obligated of to part the the that forward that $X.X synergies reason We’ve We built bought we with year. the to have to between time we that the expected million we them, for the look, is we we would said, in be this Teledyne to that we when first year. million accretion pay. somewhere we’re that And accretion had synergies thought $XX at the But enjoyed pay have going the already. $XX

low synergies. closer And right end, million $XX would the million would be to that and in behind that we it kind absorbs consent of guess, some now, when decrease that opportunities it see would the I be now the see So, I of $XXX us.

Got Okay. it.

Okay.

you. Thank right. All

Andrew. you, Thank you. Thank

go line Our Kristine next question come Stanley. will Morgan of Liwag Please of ahead. from the

everyone. morning, good Hey,

Kristine. Good morning,

constraints, steady, chain proven other risk? supply mentioned you manage the of cases. last can alternative sourcing implement has in that successful initiatives also XX% at improving you thus these what far Are XX% the had And to to Looking or quarter, trends about worsening? holding

question. That's Kristine. very a good you, Thank

that by products couldn't with of be going start forward, that We that us us $XX of that's effect products or also effect. million this redesign just the much. not we of Having We behind year, changing if components we going about we let shortages think the that. sell in our find me that over were affected million. effect, the enjoyed all not us said first the net to a had quarter Let able the one to components, buy $XXX have, think

with dealing and DeLaRosa of XX shortages activity our business our robust in very Paul units. by led a have We procurement

three they things. So do

from they them. what and First, common deal for that identify a the as then And suppliers shortages company who shortages. has those and prioritize buy we with we are supplier can what directly the

revenue may we may but have not our the various So other. businesses, much affect one shortages as as in

– on us we priority ones. that high focus So the help

especially, primary [indiscernible] Second, for some source in we our of parties, suppliers part. people third the we from suppliers, for our plus our we that own requirements looking are have have semiconductor

parts can we missing of that So qualify put enjoy. into them take found we're to XXX already if just We're parts have and product. and to today, we like them bring them not But course our them. we may have XXX going in maybe

else. we we And them, qualify like then also, shortage, the is, specific redesign to have redesign can to that looking forward. has camera see selling are can we do not redesign – if forward everything I'd that part the say significant just but we avoid we part, We product? that the at look a we especially lastly,

of part, that answer that that. we term hope these question. the that increased the we long following. it our reasons the the company once shortfall combination either to inventory shelves, cash. be of helped put There's your some question going your also out be Kristine same a can because whole bought going inventory. whole. we on one level long have avoid we our the One, our we because of that killing the us. in or get materials we're products, get it a is us to door. of kind of So We've It's in on revenue not products so But have yes, to is has setting alleviated, part our and answers that That's effects about And that's had. significant we've talked as in also I some it's going things far

issue supply a was seeing a the follow seeing the or could that you're for And legacy between that you're is really is Yes, FLIR the two? helpful. for on, then what if as I Teledyne same chain Robert, do difference there

Not Kristine. much difference,

there similar I think, is same, similar markets, which now make the as digital et is example, It's cetera. of product complexity, we because our products business. end imaging different XX% an very

there and the same. some say There's that same. the So large, it's I is would and here exceptions by though

thank Great, very much, you Robert.

Kristine. course, Of

of from question the Our Noah Sachs. ahead. comes of Please next Goldman line go Poponak

everyone. morning, Hi, good

Noah. morning, Good

buffer that inventory how stock process? can Robert, much in quantify added you you

hate hurts about must million. I it, me. XX say to admit but I it

sounds don't soon. happening sensible like to at anytime moment. alleviate you're it seems saying with it the that what's Well, expect you And

to inventory So the you'll that piece. that hold extra opposed burning the level balance just that as down hold through year at that,

down, We're Noah. going to burn

Okay.

my we're it or going but down. that burn either It's to clothes,

you're I you expecting mean, need chain won't stock? buffer supply to if improve, to hold not

Yes. We'll Noah. we hold some, will of here's course, the But thing.

think just making a is mentioned, combination things I of little I more the feel that comfortable. the us

conservative. is some The plan inventory have had reduce of other We by a amount. our a to little been businesses year thing this similar too a our

that up gone it's now much. So

we cash move back really bring So hurt the can just our inventory. that it have it flow. such We it still to that measurement ample around we have if doesn't that so is

We we that's or whether that term, buy it whether we've and We wafers it buy have, to – to the one because That's the – XX,XXX got buy to example, long that. wafers. imaging. problem here, example it's buy we And it's something got Asia got you for can't for have, keep East in with it. cannot we've market, digital and in you that's that buy

But there get other can we year. that are one, we do. things So of rid that this

XXX%? still Okay. income conversion free net Are bottom full to cash total company year you over expecting line,

At close. Very told close. yesterday. I that's Board Very least, the what

Okay.

you're inflation On increase at is piece, rate the what the cost the of input that seeing moment?

– question. There there's is that. good parts a two to That's Yes.

materials. is them the wages. one is other And of One

cost side little On the less, the increasing with from a it – goods. at maybe going And that's frankly, this world, about business from look gross in on of are of look X.XX%. that Wage X.X% inflation material and is side. our side, everything time, at the also corporate the at our costs our both we

all with say. roll up in when cost about So you not flip much offsetting seeing together, can, we're increases. pretty is we we let's program. X%, are increases of price We're The where increasing every that prices ourselves, – side also that

to hard being work to in net-net, very to keep So negate doing far, we'll so and we those very prudent have what careful two We've do. managed when that.

Or you cost equal are or than cost that a Are inflation? to price the the had? price maintaining at you actually slightly raising gap you rate greater previously

think – maintaining. I would I we're we're say

cost you're accelerating already you the maintain and the to pricing So gap? had pricing price

it. That's

security to thing – is then front. ask discussed on last national a the you've wanted And the set Okay. opportunity evolving new I

business revenues combined international? or what the now, are your As versus to of domestic national defense percentage government security related

example. for Let me think,

I X% about X% and I'd U.S. XX% think to time. were I under XX%. say about is would say, And at this just overall about XX%, DoD. is foreign

Got it.

Thank you. Okay. I appreciate it.

Thank you, Noah.

Please Our ahead. me, of from Ricchiuti Jim – & go line the excuse next question is of follow-up a Company. John Needham

wondering if in the if or book-to-bill, the segments? in book-to-bills may that for the Robert, for missed much I but provided information I company it, you was there on the have saw was either different any segments you Yes, variability

good Yes. question, that's a No, Jim.

It's Let with X.XX%. the healthy. I if me company, is start pretty may. total Book-to-bill

we It's that the is billion really money define to we backlog, have in. we by already the And backlog, carefully. come backlog. $X.XX have kind way, about remember, going We backlog that know of highest I we very good of

So X.XX% is it's but variable our of healthy, company. pretty across book-to-bill the

instruments, is whole Digital little the but and X.XX%. X.XX%. test Imaging Imaging. still marine total. with healthy. a higher X.XX%. X.XX% it's at with And environmental at to start measurement about marine little In It's the a Environmental being company, at Let's the at Digital it's than less being company being close X.XX%, than

quarter turbine first are because partly we went out of mentioned, our year, after got engine into not I same mentioned, comeback, aerospace to done is Aerospace company book the revenue the last the So we our instrumentation commercial an we've of I as the reasons plus and where electronics, been going of defense backlog. a at engineer systems have because X.XX%. business for and we – eating bill total X.XX the as to the

have really nice We some additions.

that's one X.XX, Our lumpy to is always on because I'm book program that a cautious wins. program long-term bill but

pretty us overall X.XX, So that's this for in environment. good

helpful. That's it. Got

Thank you.

Thank you.

at are further this time. queue in no questions There

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