Teledyne Technologies (TDY) 26 Apr 232023 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 conduct a question-and-answer session. Instructions will be given at that time. Instructions] [Operator

this call recorded. Mr. over Please ahead, reminder, to now Jason is go the turn to sir. conference a I’d being like VanWees. As our host,

Vice everyone. to market everyone first opened. before our quarter conference is morning, earnings to release Teledyne’s good earnings We and I’d like Brad, Jason Thanks, the VanWees, call. Chairman. XXXX earlier And welcome morning This released this

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

are though, please SEC risks, get started, assumptions, differ before in all and be caveats course as forward-looking actual earnings and we materially. periodic to this our subject release and noted various that Of may morning results the filings aware statements made

avoid and approximately is potential available call for selective one this both In dial-in be and replay order webcast a to will disclosures, webcast month. being simultaneously via

Robert. is Here

joining Thank for and and sales, every margin, cash with X.X%, earnings Good everyone, sales call. revenue with Overall, earnings first increased thank flow. morning, growing operating non-GAAP began you operating and quarter profit free Jason. record segment. We you, XXXX our in

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

approximately of margin X.X%. record. Excluding acquisitions, XX.X% quarter operating core first operating local growth also GAAP in been XX.X% have were and would of currency non-GAAP margin

first quarter GAAP of non-GAAP share were First also earnings earnings $X.XX and per quarter were record. $X.XX

the the acquisition X.X our consolidated quarter. at even quarter the cash after ratio leverage Given of flow, declined record beginning to ChartWorld completing first

on which $XXX matured second million the quarter. of Xrd We also day of repaid the first April on debt

outlook. year are we earnings and sales non-GAAP full our per our to reaffirming prior XXXX share Turning outlook,

some also derisked revenue challenges maintaining earnings year original and Consequently, quarter. outlook from our sequential forward by improved we quarterly first revenue were the able the modestly, earnings modestly As have by the supply sales and quarter pulling second chain we full to exceed slopes. guidance,

While resilient in our they short-cycle the sensitive, first economically more businesses quarter. were are

a We more now are little cautious.

On we positive defense in businesses. aerospace, marine and longer-cycle hand, our medical, the are more other

revenue, continue XXXX sales billion. X% with of to will specifically $X.X On of roughly the we approximately total $X.XX quarter growth see approximately being or second billion

we above may in will earnings implies segment basis XX our the increase points margins, segments for Regarding improvement to approximately Currently, of modestly. the outlook average other think more margins while Instrumentation be now full year this, margin contributor the XXXX.

the I further four will on now comment business segments. performance of our

Scientific, on Imaging, Our sensors for Digital acquisition research XXXX which Imaging space segment and was of in provides Teledyne high-end our first astronomy. founded infrared our and laboratories,

eXv, such DALSA, Scientific revenue then, through Since FLIR grown ChartWorld ETM and almost most organically segment acquisitions as recently has Cameras, of and Teledyne’s today. contribute and to this XX%

digital X-ray sales vision in this industrial were basis our well sales of low-dose on with lower unmanned detectors. systems, currency a quarter by for But contributing as as constant systems high-resolution First translation X.X%. and for year-over-year X.X% negative foreign Sales defense increased scientific segment for applications. increased ground offset currency

semiconductor infrared imaging of or -- commercial sales marine’s certain by modestly especially Our higher of more devices, air sales systems families surveillance, unmanned lower and decreased product with some specialty and increased products. offset

intangible XX to at decreased XX.XX%. non-GAAP basis-points XX.X% asset XX a basis margin was adjusted increased margin operating reduced amortization, and lower it points and for segment GAAP

fields last and environmental in test Turning comprised growing is of years increased Instrumentation and and all to Overall, revenue. about sales quarter measurement XX% instruments, contributes sales Teledyne’s it above. versus our to marine, first segment, noted with X%

recovery in underwater of due quarter, to sales, autonomous marine markets. as strong energy primarily vehicles, especially the XX.X% in offshore defense ongoing marine increased instruments Sales as a healthy well

Sales of collectively of year. comparison includes and the year-over-year X.X% a measurement tough last and first analyzers electronic with which oscilloscopes, digitizes increased test despite quarter protocol systems,

softness than protocols, sales and well sales Some analyzers by in speed wireless accessories. high more offset related was of strong video as and for as devices very and and of networking applications electronic oscilloscopes storage

Sales of greater laboratory of process environmental drug last sales partially and air X.X% instruments increased with quality, discovery year, compared and gas by analyzers, safety instruments. with offset

Electronics Aerospace of and segments Electronics together Teledyne’s two defense XX% and revenue. other both and The quarter of In increased contributes growth Aerospace of X.X%, sales and Systems aerospace driven products. Teledyne Defense that Defense segment, Engineered first the by are commercial

margins basis operating increased year. X.X%, last than profit greater approximately XXX GAAP segment points and with non-GAAP

quarter the margin segment, in basis from operating in Systems last a resulting X.X%, increased In profit XX first points year. decline and Engineered revenue X.X% increased modest

of through first, navigate Teledyne’s optimistic because focus broad Teledyne on serve economic markets past. times done of will unwavering capital third, on improving to the we all as that that our second, am and prudent to defense, today’s long-cycle allocation, Finally, geographic I in commercial successfully have short-cycle end we operations, aspects the uncertain consistently and from so and

successfully economic that to have shows turmoils complementary for enterprises acquire we during the multiple able also have dealt been growth. compounded record with recoveries and Our ensuing

I over will now the call to Sue. turn

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

$XXX In and operating activities the XXXX. reflected of compared first million flow the receivable cash quarter was first from higher collections quarter, with primarily accounts

in Authority related XXXX less million the payment expenditures that operating Swedish the flow tax XXXX. reassessment. flow cash to to Tax compared cash is adjusted XXXX, in from value quarter of $XXX.X capital The $XXX.X $XX.X cash adjusted by first pre-acquisition a FLIR activities million free with excluded was Free of million

first quarter million. XXXX, Capital XXXX, Depreciation was compared first of with XXXX. the $XX.X quarter $XX with amortization in for $XX.X the were in million million $XX.X expenditures million compared expense and of

of million. approximately $X with approximately was XXXX. million Stock-based We $XXX.X in quarter debt ended net of $X.X XXXX, with of expense is compared billion compensation cash in $X.XX the quarter million billion that of debt first the $X.XX less

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

full GAAP basis, $XX.XX. $XX.XX a XXXX, earnings share be are XX%. $XX.XX. XXXX full maintaining the our estimated The we to rate is And our expected for on outlook And $XX is year to per tax items non-GAAP outlook prior to year excluding discrete of

I back pass to the will Robert. now call

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

ahead. We Jim to can go you. with Company. Needham Instructions] Thank Ricchiuti & first Please [Operator go

am if you Robert, a talk I the Thank areas could Instrumentation of about the little bit morning. Hi. wondering you. shorter-cycle Good business.

Instrumentation, you Imaging the seeing any shorter-cycle I color gave you some business? changes Digital if that in business, but are you think that look about at short-cycle

a which much. businesses, and make Not is There we little provide our to coming measurement, some protocols solutions of new one There protocol a we out. product like, have is of industry. the solutions our test -- bit -- protocol in electronics

people little old loans. the ones and not for So waiting new maybe are buying the

well is in Other T&Ms almost than that, alright. the the feel where we X, and oscilloscopes are book-to-bill doing

pharmaceutical are only softness doing products market, that products. air environment. but thing On of our little we that the in are a making is in There of experiencing we up the quality range a and that there well by are -- other whole that where this environmental, we supply some the

are think, I doing overall, So, okay. we

whole? Imaging Got book-to-bill Instrumentation the Since was book-to-bill, Thank the were a Aerospace give and color you. provide you entire if to Digital as it. good think a which I am on for us some wondering enough I Defense the maybe could and and business. you company

Yeah. we got book-to-bill about. you the if didn’t Jim of put marine in, a Instrumentation, X.XX. on Marine which talk has

So, very it’s healthy.

X.XX. pulls above X it a to that, of as because So whole Instrumentation

have Imaging, little than X, is X.X. which of think, defense but less systems X, ground-based Going because book-to-bill that of Digital less is about a to substantially, the primarily over I some not than we

$XX in for said after that, When award having by have we small also UAVs. had we those some million way, our and and demand the Black in Ukraine we really an But right also Hornet, a order had air high large we example, orders conflict. those, had as coming are quarter, for the large post-quarter the have

There am coming filling first in in up orders the happening year. this and that’s part, Imaging. we is backlog have encouraged -- it’s quarter, a the quarter overall, last but been as little did with defense what’s lag So, in better Digital I than has we

And that’s then on X, the Engineered book-to-bill is X.XX. AD&E think, side, to Systems I lumpy. close is but

be So, we going are I there. fine think, to

I’d company, that’s time. when all concern numbers slightly less the say those a Overall X.XX, but X, maybe up, at this X.XX, great add than you not for it’s

our is that, portfolio cautious being uncertain facing. We the I resilience. pretty than good its feel about always everybody Other as are times are, we because just and of that

-- if the And light it. may, uncertainty just question in that some Got the of out that’s I just final there. of

M&A. M&A think out without this, know think that M&A, in Should still I be? we mainly more way XXXX. then is there think come you you we have talked about be larger about as Is deals this I might related opportunities being of can’t tuck-in potentially and for some better year to about specific again which

Jim. understand, I No.

good with obviously our M&As. the near pearls possible end a that with but of -- something analysis. that’s what might mid-size definitely We end chasing we might sheet. more -- are we up There of call, think we string I balance it’s the some, year,

down drawn our line billion. We credit, have we now have is of X.XX on about right -- which

have drawn and We it’s million sitting only down there. $XX

more don’t all are comes, it paid XXXX and sometime capacity And you probably as things. be we larger XXXX. we in early payments coming deals, debt take until lot looking But like of have of We that’s have course, a and our due. do of deals or XXXX. have are opportunity at time for larger would to debt right, We any

very it. Thanks much. Got

Thanks, Jim.

go And with Konrad next Please ahead. can to we go Jefferies. Greg

morning. Good

morning, Good Greg.

maybe machine about just are you is there are kind revisit to business, of just the way year? short-cycle, Imaging, about legacy think decompose and being Digital for vision, thinking Imaging commentary, you how cautious any Maybe you short-cycle on when just growth, like, trends care, given and to what organic Digital the more health kind your mentioned the space seeing FLIR you of

start the call -- let’s companies. is Digital our and Organic and would stay associated first, we QX. you do with suggested, what historical which first, Imaging, with eXv also DALSA, Well, let’s which is what

in MEMS X.X%, and QX growth had X.X%. of organic we healthcare a grew X.X% grew healthy There

So, systems a that smaller healthy of there. overall, with some rate happy and those growth cycle like we are very had vision

be FLIR On systems. would of X.X%. primarily the the negatives. about in or of by vehicle our had and Overall, But side had was contraction newer the a which the that imaging, systems primarily we driven digital equation, unmanned drone positives we unmanned both

quarter, after have the UAVs, which had unmanned very our some said, in vehicles. I air awards As we healthy are

down a little almost under which bit cooled was are Tomography Surveillance was cores, industrial And over declined X%. little -- cores, and uncooled XX%. and X%. -- was they plus infrared vision X%, up but a up were XX% system

drag So down ground primarily defense on it bag. and that a systems. for business was in ground mixed the The -- unmanned on primarily was

-- had I ground backlog vehicles a softness the is for just in our our were little we we and fill We to maritime, which and will tomography okay. Now be vehicles, out But, think, businesses. we overall, marine have fine. Raymarine unmanned

up, And than think, margins your degree be just little going be Can mean commentary? Imaging miss-modeling are total and given about year, I quarter. them trend a talk expecting Digital but late the to for margin to on my lesser might this a price-mix I you in you XX just the maybe for how seemed company? the forward still expect the part, you in

year, up the year start XX and right be to I overall say let’s what points Digital the is, expect margin. the Well, basis for this with the is about margins I’d now Imaging

out So on that be side. would pushed one

going think, I we margins to be and sequentially take that actions price we get should on and also some improve fine to will make there. QX, sure our we in are we

the better if company, have On price we the for going points that. overall and on we can for the should increases improve think year would now basis margins forward, we the increase XX

points, is I’d it, year improvement almost businesses, that at look so for Imaging helps increase I So happy points XX healthy we are XX Engineered basis just our going I the and That points, Aerospace about overall, keep the probably XX.X% margin. instruments when company basis look and XX basis our will about to margin to points, basis segment’s will have in Defense the basis that operating -- hope say, I points. XX and Systems Digital XX of in be you.

That I will was Thank it you. perfect. you. leave to

Thank you.

go Please have And America. of Elizabeth with Bank next ahead. we Grenfell

Hi. Good morning.

Good Elizabeth. morning,

us some for quarter you. give expectations a us are what the year? defense could on Thank basis Could then on -- for growth color consolidated the defense you for give consolidated you basis your on a and

Yeah. Sure.

in in will think primary I the we mid-single-digits businesses. U.S. vehicles. growing low-to-mid Government again, defense programs said, in think, I our the probably as vehicles we our and year-over-year QX, the We it be the defense are The saying think on were was for ground I am overall, for flat, year, flat reason, single-digit ground in the but -- primarily probably unmanned year defense. driven, growth

Thank very you Great. much.

For excellence. sure your

And ahead. will TD next Joe with go Cowen. to go we Giordano Please

morning, Good Hey. guys.

Good morning, Joe.

here? some was from where you and that Can what XQ there give business revenue for some You XQ. detail it like talked about into as pulling that means from forward to

Instruments, in We QX more that most we I pulled we that have and anticipated. was in vehicles our think, marine businesses. about had of most million in underwater in was shipped of $XX basically, that

we have also. orders good orders QX have for We some good -- actually really

that And in that’s expected said, by was as ensure supply we I chain. -- the our are to we that affected we that So just what was hit having fact improvements also, that to.

We continue rest to based that the Procurement Chief seeing improvement, on based are various what I with companies. on our seeing and the improvement year we the what of doing expect is are and significant of

pulled why forward, could and felt we did. it that’s So we we

sense. makes That No.

Now when high it’s I the guide, so I end clearly at think full here. of guide year you your mean, in, come about the

line You is second in are guiding end consensus. quarter the high basically with

months year, you derisking should three understanding lines that kind to weaker what thought how impression you to half macro the of that you the we guys about the full than ago -- are like, or You -- the holding between is like are -- uncertain, you year full think the trying there? the guide, the is that be are like, give tend second

know, to weaker, more Between earnings about, we make to share always can as terrible go that I I conservative. say look, except It’s the more we lines, lot going it’s we don’t something going per our happens. could. you a -- probably good be feel think in I and and out are are

everybody in the down, grow I environment facing, serve we this with which semiconductors being other with those being hand, is are that recover we obviously always equipment semiconductors supply. not We -- uncertain we On markets. cautious am year, XXXX, projecting -- and the both will we as are.

half the second I weaker. But don’t think going I right is don’t second to be think now the --

think going to I it’s be stronger. actually

look per in or that the you us second for the take to If the earnings $XX.XX projected make at if improve want share, the half we to they high-end. you have to year of $XX.XX,

Yeah.

from Two Okay. ones more quick me.

high, how what supply the started year just from offset cash much there up, and what the lack for pay bps, like, in the now, year, costs? are of is expectations And like before? much flow getting -- to XX of You you. having thought is are from is than improvement of that higher elements you other and it Thank pretty off much free you go like, where the market, benefit that as on that does your curious gray then how chain getting

Let with me flow. free start the cash

just to than going behind company, capability the are we not have us is year’s beat buy environment. just and of this deleveraging estimate. perhaps, couple when better uncertainty of continued to by that million cash can have -- last and get things in done we a this flow ability hope ready our $XXX say, free well do that all as is I for $XXX and there, is use million, our We current let’s

same QX, our of we million have that obviously. first bought cost half XX% as and as -- we thing, the and $XX does supply that’s quarter, about brokerage year QX. savings, from Last a seen This to about in chain, back the brokerage, Coming of year, improvement say. that repay premium goods so in we us much let’s type it’s

because don’t look shortages. we a you being revenue, is comforting is of me, improving, which But a by parts. because we at makes -- more affected because more don’t it have have projections importantly, to our predictable, not lot more missing revenue we are if little much that’s revenue That the

supply So chain. there is improvement in the

is in it. and the fact that as on also are much because one seeing premium are waiting to revenue, parts. not improvement are There paying that that. because ship sitting products, the we That’s two We we miss are going we the shelf, can or they for

much. very Thanks

sure. For

ahead. And Credit Please next Suisse. with go we have Hardwick got Guy

Hi. Good morning.

Good morning, Guy.

previous all. the good think I -- morning,

I think you adjusted a to the guiding now points in for basis so the previous level at XXs. was margin, improvement guidance are XX Group

the the is towards kind Digital are of parts and the bias what Imaging? of So it main change

January, Actually, a XX are what and mixture. we guiding we points. basis We guided you have are basis points XX is perfectly now correct.

down some guidance to in today. XX Instrumentation We taking over points, to had are from we We January closer basis XXX basis points. are

down XX and basis are in. so actually it so we imaging, Defense, and XX Systems, moderate Digital still a -- all then good. we up. up, had are taking basis guiding have Aerospace have Engineered smaller we but And points flat business, and are we we are a guiding moderate we in or that’s going down points, which about

So, points. overall, XX will up I we be basis think,

can X%. Nevertheless, because inflation to than hope stick to more and better way up increases the to some going is than we that are wages our that do is in do if our price Again, better moderating. we portfolio, X.X%

kind the for with to and margins. more increases be of make-up to indirect or able direct we inflation price our uncertain to so have part. goods purchasing to order increase of going That’s keep little and is with up in Our those a catch-up

little gain up what paid we quarter, actually. were okay. and a made we we price much First increases? we out are We positive How can from

of keep pace price up as wages. can of increases as make that rest for in inflation we both goods, the So, to reasonable well year,

than a then the intention on And price/cost little better do or and the to be that second... bit is neutral

I’d like to do better like than to do better that. than that. I’d

For sure.

Okay.

year… Last

All right.

… be we XX positive. I were year to This points. negatively hope basis by

follow-up And on terms in that $XX imply just million guidance said that to million does What your you lowering believe that of was year. broker I in purchase, the it XXXX? last $XX incremental

the tell point, out, project to I It’s it take quarter half. I’d and to were at hard but if this first say

potentially million… $XX So

So it will…

$XX … to $XX million million lower.

Yeah. $XX million.

purchases. broker lower million $XX

Yeah. Yeah.

Broker, okay.

Approximately.

Okay.

target. moving a that’s Again,

so So, been we successful. far, have

industry semiconductor them shortage, that of become has as the some were As have available. parts gone the can you expect, in down,

them of harder parts et harder the get. to at Some are still are to FPGAs, The get. cetera

So it’s makes improving, me positive. a which mixture. But things are feel

just in final negative mix one margin? And of either there one me, of Digital any terms effect for is Imaging in or positive sort the

don’t I No. believe so.

Okay. Thank you.

sure. For

[Operator Liwag with go We will to now Kristine Stanley. Instructions] Morgan

Hey. everyone. Good morning,

Good morning, Kristine.

the on on sourcing. chain, just to premiums Robert, paid supply follow-up for to the brokers want component

reopened have more So you declined. therefore traditional declined? And parts availability is you there? driving are because much as have you dynamic talked how sources therefore premiums from not a Can their sourcing now and of have these color you or the scarcity brokers there’s provide of about less that parts more are and that’s and seeing on what’s

you of that Yeah. more might premiums prices because buy from are XX% to the to able The you paying OEMs be versus -- brokers. increases the obviously them. or than end to brokers, stable But prefer picture it price from year. are there up We buy last big is we from OEMs,

So that’s picture. big the

for a there year, the were And if few brokers there but I excess that obviously, some have called some some paid want OEMs. parts, they we their been we that of asking at have are very we what to out us at it’s Last just a us we anecdotally, that availability parts. begging interesting we improving, to happen, and supply have discount and buy to them or look as obsolete the if buying, were is

improving. market So is that. I the like

pass into Great. Rob, costs on that And that can have you that inflation then, mentioned you pricing. you you anticipate whatever

last net pricing demand to the positive talk you. if financial sensitivity But for So right the the you about you look customer that markets, should now, can environment? a and been at that What’s be decision capital customer’s pricing bank for have regional macro is two environment have there your some today. to Is we had affecting more and month of or purchases failures sort uncertainty sensitivity?

to Yes. is, The it yes. answer

because market, energy I such look we dependent. in the of if On some hand, diverse mentioned, longer-cycle at a are as with like our other businesses, marine you

are our financial as the not or happening of in price what’s Some defense to sensitive businesses others, market. they

to yes, that shorter-cycle mixture. competition, make pricing that the don’t like have careful it’s in But dosage, high there our panels we low power areas, healthcare, where X-ray we of are lose the resolution, very Some businesses, and increase be share have to very we we lose prices a to so some competition. and market

that’s as pointed uncertainty, out I in I of say am shipping the what you the to speaking into when uncertainty, exactly well. Overall, economic financial about some out, uncertainty other market markets

overall color. percent when Great. Thank percent say, of one I a power versus more sensitivity? look for pricing the have you if you what what last pricing you sneak could in, portfolio, you your would And have at would more it

more XX% environment. pricing it the global XX% we portfolio, have because on I ways, macro think of and some about in XX% the more is sensitive, power depends our

As to U.S. XX% you XX% today the portfolio know, the we may way U.S. and sell has commercial and about XX% our outside defense government, commercial evolved, the

is environment a we not XX% so. the to what global macro -- more sensitive are So macro

Great. Thank you very much.

For sure.

further And we queue. no in questions currently have

now to Thank our conclude I conference I ask will you, that. Brad. Jason call. appreciate

Thanks, morning. joining this Robert, for thanks and us everyone

the Of information. or release you could you my who me at follow-up it. questions, give on course, those contact number Brad, Thank greatly have me the call information, would earnings appreciate if for free the feel to you. replay e-mail we please have if

running May at and be replay Certainly. XX midnight. o’clock conference through XXth Thank you. for and gentlemen, Ladies the will after available today

for the XXX-XXX-XXXX, using X-XXX-XXX-XXXX, participation access XXX-XXX-XXXX. may parties and XXXXXXX. International code Those access parties today. dialing for our AT&A AT&T international access does replay X-XXX-XXX-XXXX Thanks code at time and the the entering any That again Teleconference. numbers system dial call can with by conclude for XXXXXXX. You

now may disconnect. You