Teledyne Technologies (TDY) 25 Jan 222022 Q4 Earnings call transcript

Ladies and gentlemen, good morning. Thank you for standing by, and welcome to the Teledyne Fourth Quarter Earnings Call. At this time, all lines are in a listen-only mode. Later there will be an opportunity for your questions and instructions will be given at that time. [Operator Instructions]

today's being reminder, a as conference recorded. is And pleasure the conference this time, to turn my it's Mr. At over to our host, VanWees. Jason go ahead. Please

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

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

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

Here is Robert.

all-time Thank with ended record our and share. quarterly up sales you, Jason. full earnings We thank XXXX per it Good and joining earnings being year. call. morning, you for concluded an and excellent year

deliver our own excess strong of beyond with and with in difficult Nevertheless, many long our control. part as Teledyne, found continued inflation, of expectations. will environment faced and navigating – external XXXX, companies, dollar we history continued ultimately market our During earnings itself with These were other forces shortages.

X.X%. approximately negatively quarter which would headwinds, X.X%, been have impacted by fourth currency in local foreign currency growth growth sales Excluding

in currency acquisition, would ETM growth core approximately been X%. Excluding have local

earnings of year. all-time margin non-GAAP for $X.XX of records XX increased respectively, were non-GAAP from record points last was operating operating $X.XX and GAAP GAAP also basis margin XX.X% an Teledyne. of and and XX.X% and

included free interest made quarter Fourth XXXX. but million, $XX approximately in healthy, last were quarter of which payments third of the reasonably cash flow was year

completed we of our to at XXXX. acquisition FLIR X.X continued X.X ratio May when the XXXX times from of the While in acquired end we times leverage to ETM, of decline

Finally, businesses. tools ChartWorld evidenced healthy bridge acquisition maritime our pipeline as Teledyne the technology by our addition remains and gap product and software and recent between Raymarine hardware a Marine of navigation was

to still in sales recession, to XXXX and Turning a our while line full initial we revenue, projections revenue from with and outlook with bolt-on earnings of recent outlook, we're sales year offer inclined XXXX very X% approximately total early including acquisitions. expectations. incremental unknowns see an including XXXX many of On consensus growth in

average. backlog-driven be than our we to growth higher long-cycle expect For businesses,

majority short-cycle currency tough economic the For the export will impact XXXX of uncertainty first headwinds foreign commercial quarter comparisons of regulations are and businesses, fluid. our remain and where

We company be continue in expect the not these total will but overall that growth contraction to less businesses, average. growth, see than

Aerospace items in a are scope to by hand, XXXX supply are NASA the completion as our non significant Engineered constraints On in improving, There the other minor at modestly. and few offset of increased equally such but takes contract the contract other Systems year. chain early Electronics our OneWeb highlight other albeit puts segment, no the on and this

Electronics XXXX greater Defense at commercial Aerospace of sales. points mix as imaging currently flat relative and tough approximately XX Defense of we basis margin digital to contributors in be slightly, to this, instrumentation may aerospace and while outlook XXXX or improvement comps especially margins and be earnings Electronics declined above-average Our aftermarket will think a in given

flat relatively our translation Imaging Digital high-resolution on well now approximately and I X.X%. four sales our as comment vision segment, the as segments. our of were industrial systems, for In headwind year-over-year scientific low-dose Sales increased currency x-ray our further despite digital fourth of performance will quarter detectors.

at since levels XXXX. in the of acquisition Sales increased May of closing commercial and also imaging infrared components FLIR and record cameras were

some from While from sequentially especially total systems the on FLIR-related third tough increased quarter, sales unmanned sales and surveillance comparison. of year last gun declined

quarter the year. On XX adjusted only, margin of other sales considerably XX.X%, approximately margin the asset unmanned XX.X% air segment basis amortization increased greater systems GAAP than was segment and intangible was hand, operating of fourth last year-over-year. points for

which and electronic despite Instrumentation systems, last despite of a our sales quarter increased year's. of quarter comparison fourth the headwind. last oscilloscopes, and overall approximately segment, year, test of analyzers with increased digitizers tough protocol versus In X.X% translation Sales year-over-year include measurement X.X% FX fourth X.X%

remained analyzers standards products protocol and Universal oscilloscopes of Interconnect for with PCI healthy in Express or continued or component, such and Bus Express strength as Sales peripheral USB. Serial industry

monitoring ongoing year Sales the last greater discovery well air increased with of environmental instruments compared increased instrumentation the primarily and marine recovery to and marine of analyzers. gas sales both X.X% a markets. in offshore as energy process defense with X%, Sales as due sales laboratory instruments, in and quarter, of drug strong

Overall, asset the Instrumentation points the fourth non-GAAP basis a excluding basis XXX margin segment which XXX and operating non-GAAP to to points profit GAAP amortization, on operating increasing basis margins intangible XX.X%. quarter increased with XX.X% XX.X% in brought

of fourth broad-based both growth Aerospace driven aerospace and quarter and Electronics sales products. segment, commercial increased by In Defense defense X.X%,

basis profit revenue profit given Systems lower operating operating segment electronic non-GAAP Engineered greater the increased but year. for approximately last and increased margins XX% segment, Fourth service In our some with declined products. margins GAAP points than X.X%, quarter of over manufacturing XXX

Sue, make to remarks. the to turn concluding want I I a of Before over couple call

faced was year. our most our end very Despite earlier, challenges to macroeconomic by Teledyne in XXXX. exceeded the point noted issues at was and any supply during that the chain issued pleased overcome earnings top the companies results outlook able I First, of

grow. aerospace we While businesses difficult that confident will predict long-cycle energy defense, are of markets in a outcomes medical, to our reasonably number XXXX, serving and

and gray market begun in for premiums have the is components ease difficult constraints modestly. to electronic demand imaging instrumentation and more supply to While previous our chain short-cycle predict businesses,

the optimistic continue business that in am long challenging management's Given will markets, on portfolio balanced path I our of its and XXXX. successful Teledyne history strength navigating our of

will turn now Sue. to over call the I

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

of and inventory In same purchases, of from cash timing with fourth $XXX.X reflected operating compared million XXXX. flow compared flow The the period interest rate the interest with the for was of fourth quarter, payments of increased $XXX.X million, due quarter activities XXXX. to greater bond the quarter cash XXXX of fourth fixed

operating the in the expenditures was capital $XX cash XXXX, with million million quarter quarter XXXX, compared compared were of XXXX. Capital is $XXX.X $XXX.X that flow, XXXX. activities $XX.X cash million from in of in fourth in less million expenditures fourth Free with

Depreciation and amortization $XX.X expense was with million. $XX.X of compared the fourth million XXXX, quarter for

quarter of inventory the for XXXX XXXX. million fourth no step-up non-cash $XX.X addition, expense with recorded In fourth amount of comparable was the quarter in

net quarter million. ended that cash $X.XX debt billion billion of $X.XX approximately of with We is debt, the $XXX.X approximately less of

Our compared XXXX. $X.X million stock with was the XXXX, quarter fourth of in option million in $X.X compensation expense

per with be currently in the in believes Turning share $X.XX that of $XX.XX. earnings $XX.XX share quarter will our basis, $X.XX XX%. earnings is non-GAAP the $X.XX per to to in XXXX is $XX.XX year estimated of XXXX to the excluding first outlook. earnings be rate, and $X.XX on GAAP discrete items to range outlook of year range per our Management XXXX, and for GAAP expected non-GAAP a $XX full to full The tax the to share

to Robert. the pass now call will I

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

[Operator begin Instructions] ahead. representing with We'll Greg go question Jefferies. a today Konrad from Please

Good morning.

Greg. morning, Good

the out I your supply around outperforming mean, then, supply in maybe chain to start, in underperformance have maybe on on it you can your just terms are given peers in expectations seems businesses? And update quarter. XXXX, and of and of cycle side called commentary mean, supply year. terms also defense Good for us What demand? this seeing you just I like long the just chain across somewhat

was be while X% X% growth. X%, We in think businesses. the XXXX modest we defense, our that's relatively about U.S. Frankly, government organic think it'll growth XXXX generally our to was in

are we optimistic. then… So And relatively

surprised was of just with outside mean, segment. I the them across margins in pleasantly some seem the commentary. I very mean, I

in assumptions around Just the just looking your anything terms and unusual price let of of margin for this year, add XXXX. commentary some are what in just inflation the me and QX opportunities that back outperformance, think about that for at

XXXX. in very about think in to month, basically hit and think the stand end QX I just XXXX, a we we like XXXX, be just the going the favorably. half last softer quarter cylinder every Of especially of we that Well, had month we is out at

our Mostly, a FX It's much in of quarter. I X% Maybe we that. will of think too there have headwind, know. some X% headwinds the don't revenue, maybe first in decline, XX%, say maybe as from be early. as We would revenue but we decline

businesses. we picking On we QX, Right the last up. the now, some some short-cycle two pick this weeks seem first But think had like the two hand, other did year, will in just in I slower be up QX, year. our we early in of to the they orders weeks,

XXXX Greg, about overall, altogether. So I optimistic . am

needs? growth, you free flow then in. margin how free given and are how are just terms you sneaking working cash thinking flow? in I XXXX in the target, capital thinking one mean, talked you I about mean, maybe past, about in cash just one last top-line about any expansion And XXXX, a of

We just in little be cash. to little in to really on think be be going exact a because second have going be we Well, very approximately $XXX I short careful. In XXXX. not pausing think higher, is would $XXX in whereas to cash we that's this and think Yes, million XXXX to our we in cash, XXXX, million, for were a XXXX, happen asked. a

build inventory there of on to, in costs $XX we million of the us because million. repeat going which of about had short everybody shortages. wanted to of taxes, brings in Also was deductibility XXXX. more than referred which lack R&D we think little has million. about because fell that that's revenue $XX We that We We to the XXXX, $XXX us about shortages. primarily a in quarter fourth million $XX more cash don't And itself

So, we're optimistic.

Thank you.

America. representing of the next, line And going to we're Grenfell, go Elizabeth of Bank to

open. is line Your

couple one, is guidance. of growth X% is volume what break in a that? questions, price and in Could what you the revenue Just out

to of X.X% too I X.X% announced. made think it’s including most one do acquisitions that a tell we the you recent that’s I’ll then both, early about organic and our growth but little that we from

current these in projections doesn’t believe If one at you those of inflation really point. from and that I time, am the this at GDP projections at look people

drop I will little developed But U.S. will grow early about the grow GDP pre-GDP the X.X%, where little it's higher probably in are projections inflation overall X.X% are That's But don't too will Elizabeth, for know in a in me. either. X.X%. economies the and to the that a think projections only maybe XXXX inflation. markets

that move like So, at and say organic we'll I'll growth of they we course, increase hopefully, did to this things acquisitions just of we'll have that X.X% If too. make XXXX, expect time. more an in

then, by can you outlook your a give for And you Okay. us little most where segment on detail see upside? opportunity the and more

Sure.

about First, and test the I to we in company. of be environmental or includes instrumentation, expect average X% the and marine, which think growth measurement,

acquisitions have doesn't that course, it. Of in

over Engineered about Imaging Systems, growth, we aerospace a last little maybe than defense a and in aerospace whole, we Part again being that maybe expect successfully, year, a In and had that ended $XX million OneWeb contributed reason little maybe X% program segment defense, X.X%, the we of less revenue. the average, a which the for and as X% X%. Digital

adds be On the because above we hand, million. think NASA average, we Engineered Systems, about won very the successfully contract, other which MOSSI in the that we'll a $XX little won

- all at say I point, that's this about can that. that's So,

Thank you very much.

Elizabeth. Sure

go And Company. to with the ahead. go & we'll of Jim Needham Ricchiuti line Please

Hi, thank you.

could versus some So some for the XXXX, the drive where company are are be that the where long-cycle you as is that Robert, if there about it the short-cycle talking upside business you of upside there at or might parts a whole? looked the commercial X% business

we improving at I also them. if look broke energy markets marine longer are down, think in the whole that X.X% for X%, I the it marine and as will marine. businesses, – be are as a offshore have environmental projections measurement, our think businesses together. X.X% in short-cycle the We is and as energy And over which because and much that a maybe little test think about

good should be imaging, maybe X.X%. which digital acquisitions, DALSA others. We think a to relatively do was next eXv. about we some would better have little think year fourth so did talked that quarter really I but have In give and over some a a about we where think made last X%. of are X%, maybe We that good and us in already we the flat FLIR with organically, We acquisitions the going year, really

So between defense longer – built defense is and it's than cycle and - the aerospace, aerospace.

the have cycle web, some, we will there. which may If in $XX which defense and more . that be we you grow businesses. we short We I've talked won discount Aerospace and already about Systems Engineered comfortable theMOSSO, feel don't million are longer-cycle flat, think

the in seeing look of what trends So you constructive at Robert, on like market. commercial alluded some some sounds you variability you in in on are your are business parts businesses, it positive color I you the If relatively can bookings out whether the commercial a there economy? are might with measurement seeing that is that. and anything that a maybe on be more it's areas, consistent bit or But machine vision slowing and in little to you test provide

Yes, a bit. little

it I head. think on you hit the

X Just why in book-to-bill X.XX. to going it longer said X.XX. about and specifically the fourth whole our cycle, is the year, – and book-to-bill was said, feel I'd I We're That's measurement, in look just for dropped good say it's what we sliver, about environmental if it. you a at Marine, you to our down quarter, fourth in the test while quarter

lower. To me, that's sliver a

are that. we cautious about So little a

a we about and would predicting. okay, FLIR be I dropped the eXv of cameras, hit systems our of park fourth further think think bit and quarter even vision but we're scientific some a it little little the just DALSA, in out and cautious So we

predicting side, On are hunker very we always If the All we do that we’ll cut to to other have is to or another. have is hire, if we're we are our one is do. have cut, early. other to I kind we and what Everybody do side thing going to the mean, it's to to have we’ll and down just what do and we doing we the of make cut hire numbers. chase, we

X the around for last book-to-bill, as was the Was company question, book-to-bill whole? the a

X.XX, X.XX, but Engineered in about X, was that's under very but just but which has that Yes, it, it's X.X%, Systems lumpy.

which Engineered is a business. long-cycle For System the X.XX, year, was

was company X. For the year, the to closer

Thanks it. Got much. very

sure. For

with from next line our And the come go question Please ahead. will Giordano of Joe Cowen.

Hey guys. How you? are

well. Good morning, Very Joe.

and hearing actually half you're been down talk the paid about more what risks, that raise think supporting I've about things in continue now? you price deflationary prices how the may and to that is ability seeing something you're like of be people given going or the to of second they do like year that. your more prices in characteristics some from just it where seeing, are Is about

up had about materials, then, stuff indirect we up pricing. you about direct that XXXX, added, wages $X.X billion X.X%. up And we we in ended go spending, if in of about went against Well, and Joe, overall overall, X.X, X% hold that, what added buying we

of am only Of course, put on I this the goods because in saying cost I this want that's sold. perspective. to

prices increased X%. across we the So board,

Our materials negative. inflation was X.X%

Our negative sales. wages X% to were

So when negative. increased you inflation X%. was materials two, add inflation and was sales, those prices X.X% wage We

basis So the net-net, determent we about between points two. XX of suffered

because to giving are raises inflation X% increase to – are across employees somewhat predict some the as increase to in have our the we are we board. Now, and But difficult that about prices. half. prices people decreasing going to talking have we prices because It's you to much? going are going to inherited we expect forward, more we How we said, second have about

for on the have up So It we how depends behaves to prices make somewhat. increase market to itself. that

now are are our We versus year improve good. and that's margins right saying overall last to basis points going XX pretty

Last premiums. broker $XX parts. think we be XXXX, to less brokers maybe that have million we'll our half. for excess will So, year, We paid in fees

short level. a maintain unknowns, lot answer I that maybe long a we'll it's mean, and I feel increase our crisis There So, is a to but question. of on

do a I what guide, I think we if is are do about the a If you narrow of of the like, indicators there protected If that these – into bottom-end you – businesses? guide, bottom-end that go businesses at kind and at have? anticipating certain does of recessionary you you you I it's think pretty but do we your recession, Like the mean how outlook pretty macro guide, If your declines do some about think if are you are of bottom-end feel the like coverage of at there bad. the bottom-end? which do have like – guide

government less think XX%, don’t energy, are be our aerospace Well, in XX% about constitutes cycle going businesses are I the which cyclical portfolio, scientific, be to affected. overall, about our medical, which longer would defense those of

short flip On obviously, cycle of hits. to we businesses our the to portfolio. world XX% overall side, will some macroeconomic the constitute suffers, have the If take are going really

As not narrow that primarily coming happen. larger we could of but XXXX about came a going sure strongly you we a had range We that. because did, okay have feel we're what's we with, out probably out as said, we very to range, as have

things you me. Just things the for you like a adjust expenses necessary? judicious weakening? and like, in on adding be started that last things little and one started that travel you'll have more bit to internally Or as anticipation Have is of

our we going we're to expenses control . operation. vigilant of facilities. our through no, that's of footage did we as something and we do way what that's only do a controlled we macroeconomics eliminate continue We as it XXXX made the Oh and Everything we're regardless manufacturing we everything. square well that. the and are. out in We day of It's mode day travel, in

Thanks guys.

sure. For

Hardwick of Please representing we’ll go Suisse. [Operator to ahead. go Instructions] the Credit And Guy line

good Hi, morning.

benefits there Teledyne in success – with I you from any months the and from a of combine that? just revenue combining bit success is the seen we've come two XX to mean there since potential some any to is wondering comparable eXv. I'm the as about to the insight platforms? stories been same DALSA if past, you've on technology it's FLIR. done or closed whether give if So portfolios stories how Can progressing, us is

Guy. Good yes. answer The is you, question. Thank

We have some products. new

had Raymarine We and some we gap mapping most hydrographic mapping we in has markets, ChartWorld this new also for of or a vision are we've the especially do have and acquisition the – two. geospatial FLIR we lot and recent business, machine business example, where bridges made this between those that

I if bought we if just know FLIR, don't ChartWorld didn’t have hold we would we geospatial. were have

those So, good. are really

FLIR products really is The legacy FLIR also at brings domain. And the good unmanned vehicles. have products in has that, the now ground-based had in other exceptional underwater historically vehicle domain. thing air we Teledyne

or So digitization common now, companies, of vehicles, software we in the if of the so underwater between technologies you look there a of is because of two three in control, have revenue vehicles, about those of and terms million in unmanned ground vehicles, of at And $XXX unmanned unmanned air unmanned terms lot combination vehicles. imaging.

So, will, of those time. as are a after some grow course, that function examples, months. But XX GUY, of

guidance, half? like Okay. tailwind Thank current quick guidance the a understand just just at that I FX looks be to in in second am your a could follow-up. trying you. the And actually rates because FX it implied

be. could It

X.X% don't way. I year. don't going might don't last certainly, anybody we think said to the happen. certainly we it As knows. be versus economies X.X% first they Having going but I to don't knows half, I put ever to quarter, what's think don't they know. that, think think first say, that the X% a know, in it's I headwind anybody think

rates Okay. currently? dollar you But think clarify have perhaps euro about you you can what just rate

X.XX. Well, currently, it's

though, not right? you're That's in what using guidance,

X.XX. We're using about

Okay. Thank you.

And queued Operator questions are time. there up other this at no

now Thank will ask conclude you very much. to conference our Operator, I Jason call.

or it. course, number could give me. conclude the feel Thanks, follow-up and to you have the information My appreciate joining, on phone email release. earnings Thanks Tom, and if questions, on of you. the we'd call And Tom, thanks, everyone, for free if me replay you call certainly

be available at for Pacific running AM Thank and gentlemen, February and at starting Ladies Absolutely. conference replay you. this XX XX midnight. through will

of may International at you enter participants entering any XXX-XXX-XXXX. dial please of You can service XXX-XXXX. the are XXX-XXX-XXXX. AT&T numbers access code the the by XXX-XXXX. playback XXX-XXX-XXXX participants, Those International and access XXX-XXX-XXXX time again access and dialing dial code

for conclude you for does our thank participation AT&T using Services. that and conference Event We today. the And your

You may disconnect. now