Teledyne Technologies (TDY) 24 Jul 242024 Q2 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to Teledyne's second quarter earnings call. [Operator Instructions] And as a reminder, this conference call is being recorded.

At this time, I'd like to turn the conference call over to your host, Jason VanWees. Please go ahead, sir.

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

George Joining and and and after airports Executive back Roks; Teledyne's and Counsel, us, Chief came Melanie me but Mehrabian; and General the Bobb, today Edwin Secretary, late is would Officer CEO, joined President Cibik, Chairman, EVP, in Senior George COVID Steve last getting isolated. CFO, Robert President weekend. stuck Compliance week Blackwood, COO, and with Vice being are have

by will remarks after Robert, your Anyway, Edwin and we ask Steve, questions.

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

Here's Robert.

largest record you, cash to and million Thank and stock repurchases. July thank increased last call. in all-time margin In allowing from segments. morning, X you flow the on year Jason, increased second and repayment, deploy achieved Teledyne of approximately our acquisitions and joining us quarter, for good $XXX debt earnings through free our Non-GAAP operating each

earnings and increased and our sales Total and recent exceeded most sequentially expectations.

difficult and as automation, test industrial comparisons measurement. remain such especially and Although certain in markets, commercial year-over-year electronic

period sales instrumentation quarter, backlog. driven the were systems. and we despite sales than lines, instrumentation business partially in businesses. a decline performance ended own second our our our flared defense the and in orders imaging anticipated record exceptional by sales were product greater with offset the industrial infrared defense-related Primarily year-over-year businesses, third for declines strong Nevertheless, Teledyne instrumentation space-based and aerospace at the due total Furthermore, marine expected of record to quarter consecutive imaging certain legacy

reasonably XXXX. sales sales we're and second that quarterly we half again of to year-over-year will confident sequentially, increase Therefore, growth in the return

with plan $X.X stock in the as second continue end the repurchases capital We balance at acquisitions. million. leverage quarter well the even remained to of Finally, in quarter, pursue significant as deployment XXXX our

I will now our call of who on X performance Edwin turn segments. the further will to the comment

longer-cycle whole, a This Teledyne's of meeting Thank Edwin, of maritime markets, combined digital XX% and on will first infrared represents like segment, you, is semiconductor as I portfolio. report of and the space components report is on and condition this navigation. factory which such segment as automation, a cameras monitoring care, And to Robert. Teledyne the defense, from mix applications businesses health with including for cycle and ranging inspection shorter industrial

last compared Second XXXX with sales quarter X.X% year. declined

As machine expected, markets approximately to sales declined industrial vision XX% year-over-year.

significant contribution was infrared helped increased operating FLIR by quarter, offset Teledyne's sales typically the sales defense year-over-year for margins entire from However, fair us lines. margin from this business consecutive fourth reduction margin, even imaging our partially detectors. Furthermore, healthy the in product of portfolio overall the protect given highest across and space-based

Test XX% I of remaining contributed the The of represent Teledyne. X instrumentation the will on which of Environmental Marine little over segment segments, now a report XX% other and consists Measurement which sales. & businesses,

marine quarter, sales and the subsea XX% quarter X.X% increased instruments Sales in primarily last offshore total the For segment, of defense due energy to strong increased versus sales. year. overall second

with measurement analyses. include product sales COVID recovery monitoring quarter greater margins instruments environmental systems, to instruments, test and heavy Sales operating segment and oscilloscopes, of by quarterly X.X% basis which points XX.X%. XXXX. sales decreased drugs a the of and basis non-GAAP on XX.X% with profit a lower XX and decreased comparison versus Instrumentation second basis Overall, points increasing offset systems on operating year-over-year increased laboratory GAAP another emission safety of and processed X.X% XXX to tough Sales analysis, in gas, gasoline digitizers of

Aerospace segment, XX by sales, non-GAAP the XX% aerospace and which represents products. X.X% and GAAP defense of sales segment quarter increased growth Teledyne points. of margin with the Defense increased profit In microwave and increasing Electronics driven operating segment commercial and second approximately year-over-year basis

which sales decreased Systems quarter profit X.X% the overall segment, For X% second lower program revenue was impacted mix. and and to Engineered operating sales, unfavorable contributed by

I call pass to back the now Robert. will

Edwin. quarter our balanced was second conclusion, business strength the Thank our portfolio. you, In to of performance a testament

of strategy our which growing. businesses, proven are those We also increasing margin in continued

While markets. in reasonably challenging margins protecting businesses with more

year automation and full markets easier the industrial year-over-year is remaining measurement to last as half. the comparisons current earnings some electronic identical are such in outlook although with Our and second difficult, test quarter

While outlook businesses our and by supported is global record the strong and for defense, energy our aerospace remains backlog.

and we But also cash flow, authorization. under own of we our current sheet continue our acquisition purchasing continue plan Finally, our $X.XX strength billion review to to balance stock given opportunities. the

I call will turn the now to Steve. over

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

cash Capital $XXX.X is flow, In million million due compared of $XX.X XXXX. the expenditures, capital from $XXX.X million cash XXXX, $XX.X the $XXX.X second operating million operating quarter quarter, that in million less quarter Cash the of in second activities cash million flow XXXX. stronger XXXX. performance. XXXX from with capital second in in to with flow increased in $XXX activities with was quarter was compared expenditures compared second working Free were in the

$XX for debt net and billion quarter compared $X.XX approximately was XXXX in with quarter of second million debt. XXXX. billion $XXX.X We million million. expense with approximately is of of $XX.X the less $X.X ended the cash Depreciation That amortization of

earnings share $X.XX Now the to $XX.XX outlook. that in of $X.XX full $XX.XX range our per in earnings non-GAAP $X. in turning and of $X.XX for per affirming are to is of $XX.XX we outlook And prior non-GAAP of believes the to third GAAP currently with our quarter be outlook $X.XX. year to XXXX, our XXXX earnings range share the GAAP Management will the to

I will Robert. now the call back to pass

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

Instructions] Ricchiuti Company. question with Needham first [Operator to from going come & Our Jim is

I elaborate driven in was business, saw wonder hoping could bit I on and get a the from little Defense book-to-bill. to the more the an what book-to-bill like color largely order sounds Aerospace you the you but It if just on quarter. bookings, was standpoint the positive by

Thank you, Jim.

X, was at in just was -- overall X.XX. our -- but First, over X.XX. think very you're was was close X.XX. like book-to-bill overall, Instrumentation strong X to in company. book-to-bill X.XX, and Aerospace It I strong said, correct Engineered as but million Digital you generally, and for also X.XX, was resulting Systems at the complete X.XX of combined Defense at Imaging

of the in the might what kind half If That's I'm we defense into business the the longer-cycle backlog longer-cycle business half of is have half? drive do about second the that back the second think backlog in it. it wondering mainly helpful, growth as of short-cycle Got and for Robert. you converts the areas other what expectations converting. and to revenue, maybe related,

start very that's and with as well. me you long-cycle important business the It's is is, said, pretty the Let Defense first doing obviously, part.

And and commercial instruments done sensor that's from The Aerospace imaging the computers have the we'll businesses. is exceptionally businesses. aerospace, to we They've do year, the so. third to second for and that Aerospace, Marine on our the from area continue then is Energy. well And our both area aerospace aircraft

total shorter because Digital year. cycle relatively the Digital to back seeing second in we first year-over-year of businesses, of commercial in the should going good Imaging year that's the is declined be half that think Now a what is it as flat which whole, the the we're flat, half Imaging

of Some of we're like that systems, our we especially the semiconductor in which microelectronic early there, in from mine, is come the are seeing are is orders the seeing slides industry. uptick canaries MEMS, mechanical the encouraging, recovery some that which from kind

example, little high-end that is that our X hoping than better better. as also stabilized picking back trends machine and thermal these and up of coming We're also we semiconductor which vision indications and we inspection have cameras book-to-bill encouraging. they then, continue have And our reached doing with systems, a have. some will some or has an that have businesses

we're overall, towards the think positively I inclined half So second of year. the

Our BNP. next with from Andrew question Buscaglia comes

what questioning. are of Do XX% line tough you market. that line, think, that little you in for bit were you How test guys like your expectations and weaker year out? you do I long talk but your valid? playing about suggesting. for with been has the Can bit in QX, So down see feel still a A a measurement little

is very measurement, that's you Andrew, tale to cities -- X business that. One one but it's and little devices But That protocol [ about which Yes. [ is the rules there. it's we picky, XX%. the -- and cloud. our business; ciloscope lagging. better. have X as which the and to back Not have bit our is also About the be X.X%, business. and coming businesses. aceloscope ] communication which we and test It's devices yes, the are a in for business, -- our is a fast is within of We know, -- ] basically business, doing other protocol better, close

the with we points instrument about our took total and because in out improvement instruments of out the we being partially example, businesses okay. even have margins pretty We for T&M strong, Having doing early, that is part said cost well. very fortunately, almost are portfolio, took weak, anticipate, environmental very cost XX and in our that, our basis for Marine of And us, remained business.

answers don't your I So whether or that fully question not. know

really out that instrumentation, that and into maybe should the helpful. How full about there. you the have confidence driving we What year? think yes, No, continues has the you what's second Yes. been sticking for that, -- presumably, can half? that's parse And Marine visibility good that with strong exactly

areas. Two

offshore the oil production First discovery. is and

We that business streamers have bounce gas from and there. the is down -- and you have whether continues to we be. floor as signals look that acoustic instruments a deployed in determine oil there are at and strong That's ocean to know,

business. is, Actually, capacity in other are connector They doing The of our businesses. well. course, almost we're part that really at

Marine And second of then business. the part is the business of part the the different

underwater As you unmanned have know, we vehicles defense vehicles.

really doing are submarines. businesses also well, is really business and provide That for vehicle doing Connectus underwater well. our We

production So it's Defense a Security. discovery and oil offshore & of and combination

Jefferies. Walters Next is [ Connor ] with

year off. tracking of update the free the line billion to to half, first drivers year? cash is free some do the What top for Any guidance first flow ahead in $X flow start well And the start just of your for a strong expect given the despite somewhat target. cash constrained you are Just the what in such half?

don't want generated cash that because I Connor. X $XXX of first question, million the to be quarters, good we've permeant a That's about in free flow.

I think some the due. have payments second we bond half, in coming

due. We have some coming taxes

be So I less. think going to it's

hoping are cash, front continue above free said position. flow right confident would million. be that, $XXX stock. end our But our our enough That's in purchases that the of where loaded. being we're heavily with cash our we're now, having We to sitting cash own

munitions, Okay. we've Got -- more over lot maybe the clear. jumping funds in divergence you announcements and bit Digital technology electronics any you defense very just And such That's in into wins how And as about Imaging? the Teledyne, this, within in loitering of seen some it. areas new a for where a little given forward? exposure are -- thinking versus just Engineered A&D are going

No.

which precision, I at recognized I a loitering that, new X. competition them. what well ROC that the whole is programs coming already think very our slew unmanned that most these with we we vehicles major fact you There's to keep both say The first up. systems for order but competes have XXX against now terms can just our of of in one, announcements would look vehicle, send and for that that's important the it target. is call aerial And also let's the over the

The know, the Black other about introduced staying to easily. year mini we call in may a them is feature. sold decide systems is And recently. whole are we about for X the was We can you example, accuracy. of Black again, bring Xs, you inches bunch vehicles over you drones. what X as next are part if course, got which first distinguishing that X,XXX a of them do and with back, years, very And production small order this almost the size. Hornet That's Hornet

government very the We U.S. continue be And that, program right expect our that from are defense to will and these orders strong a now. businesses. contributor

have the really and we businesses are Then have submarines. good I for for as class and we backlogs inserts connectors Virginia the -- the have doing mentioned, well. Those Virginia or Columbia

we Canadian RXX come counter and of an deployed have have Europe. have in for just drones we UAV orders -- that RXX that's operations, our finally that and being We are And out also example. also And those. the systems

what We systems. weapon first have recognition target it a and development contracts. order X we have -- [ in million Those order the have That's $XXX very combined million it. call for ] we the the about system, expect family lightweight of uncooled we FWS, over and $XX for IDIQ production

So examples. they just are

has our very about think well -- up picked that. I pace Defense and we're businesses very defense especially the FLIR is excited

with TD is Joe from Next Giordano question Cowen.

machine hear. vision said business, Robert, to you you're in some stability seeing the

XQ? to compared and versus the in versus I XQ? what's think year-on-year. what's mentioned the XQ? XQ expectation XX% And XQ What second like the that was it that was you And quarter? expectation was XQ, for down What

basically, Well, not X think QX XX%. about $XX were in and for Edwin be the they million so would in think QX, XX% [ to year XX% going I I indicated, be done QX and about ] as and that's

market Partially, to be going getting in QX. cuts That is and frank very So began year -- to improve. about partially it's because it's straightforward last easier softening improving are it.

going So systems areas. seeing as get And also the the back our we're inspection used and industry year. all I in and in are is semiconductor over strong you indicated products coming know, world. seeing, we're to before, comps back some are as the coming But uptick certain this

higher higher And just XQ be the clear, XQ? business like will second dollars they to the for in be than dollars half like are And $X.X. that in versus

we that relatively in are I own a But think it be want second -- looking in certainly stronger. be good. be not right little I very things expect while half. now bathwater maybe better to to we our well, to because right have QX, now, be to flat, expectations our are careful don't drink the

both our which have as as systems, division We visual are well systems systems. infrared

at there. QX we're good have would with looking a And be picking we the -- think up. So combo flat I word

a their hearing off components seeing little like also and pace gone suppliers the to of some finally are cool people little We're telling that they same pushing they've I still has receiving from Boeing Okay. about you that? any down, production bit. bit? at been talk a but know suppliers Were back

also seeing not only important very going rotation as there. is there aftermarket products. much on that our business okay some we're and OEM -- we're there's to in Well, But we're not the supplying doing OEMs. us, there We're

I pretty think business is healthy. overall, our Aerospace

Next Freedom Capital with question Hardwick Markets. Guy from is

cash cash repayment? year, when I share your where deployed look back would for Going issue, you of sense terms free this in you free to the the what's mean, back flow on debt and have flow repurchases acquisitions,

which in keep our the our liabilities, is Well, Guy, to we mind was cash have quarters. And you think also so because strong flow first in our free X debt.

pretty have It's that $XXX payments pay only in -- years, October Other to fixed -- set our about and XXXX, that, Our than you up in time roll like we our owe payments will the debt it's pay start frame. X.XX%. interest are we is million over if everything well.

the first Now bit back price, the that half our stock. depends for bought on quite continue Maybe We year. we in think the year, stock right? will the a buying it of we

we're the We same expect also do that. at looking to time. to But continue at acquisitions

good cash, credit balancing our X, that renewed we're and to Right serious X line in because in very years. for a we think our as another we're ability of We we just forward. So the now, really situation. efforts go [indiscernible] generate of

it. We haven't touched

on touch. billion $X.X about have We

payments, being debt interest We no to rates stock with back X.XX% at the ones can -- good feel on over big now, that we coming and focused well. as Right acquisitions years. want. our do looking many we buying So whatever

changed quarter? Or as Okay. by us last updating segment? would expectations so, the on has you And just a nothing margin follow-up, your mind since

it it the up instruments, about be it for to can healthy should We in an full I basis points think I do us. full for wish, XXX No. for was pretty year. the can do year as example, XX you that if

In But last what mentioned may go at the look headwind down that that the went up a little think million we we We'll have you our Imaging, whole if XB there. at businesses, million. in while FLIR margins though portfolio, margins businesses. they our DALSA went even go down $XX.X Digital from in significantly was year for year to I the $XX.X bit,

So think for be we points. they Systems, segment, XX be basis that's I smallest going that XX. Aerospace over points which I defense, half. primarily basis maybe down, going our think think And well, about maybe go from think overall, XX basis we last the the all modestly, might the are XXX pretty is up year, headwinds and first down doing to maybe we're should year, And because considering margins Engineered really have, margins good. XX, segment of the we points

Jamieson is with question from Vertical Research Partners. Rob Next

just digital the XQ, just of X guess kind get down margin XQ, much differential to next I basis real with there Should we, quarters, XX between points? the quick to clarification quarters XX, in X is imaging. that on

Imaging. if can look you I were margins the at half, see QX, Well, overall that. in first the let answer XX.X% about if think in Well, Digital me I

and You XX% dropped QX, in up XX.X%. pick QX, in then as basis QX. as go look XX.X%, will at over XX%, XX be to they points it far about think to We may

half. the a end first we with So year should even weak at XX.X%,

some back. of keep margins but So of that the to have these and action markets cost improving because going Edwin both think coming because are the are also I taken, people

And business, small of is but a on ask more bit going to test wanted was the I look, ask instrumentation Perfect. a I I part know That's about and your within to and just this helpful. measurement. that oscilloscopes next. actually little pretty

cutting more? on acelloscope to and business? spend one be improve there's that anything there and within the side kind China-related lagging measurement government or is their on Just would of soft bit in the R&D spend, delayed additional test and morning maybe in competitors your color Any this just little curious Or you're that's protocols the starting end weaker it great. a if seeing outlook just all of markets

Yes.

think I explained it very you've well.

hesitant CapEx. I are think to people discretionary spend

of end good high So in make down. really where you has the oscilloscope slowed money

to the as But with XX% be first years, to in the other course, April that, see business advantage many was in expect had soften, was were out of year-over-year. subsequently, having the whole out you down We going the in and that took consequence, in box same. that year do won we the market and said one exceptionally knowing about everybody having that late of business early healthy. QX we probably have the And margins else, we to doing in been that cost a early in the The in that to as QX.

queue. And Bank Instructions] are going [indiscernible] to America. of from now We we in one [Operator have Jordan more

on the restrictions Digital segment? think if be ASML Imaging puts and what impact How we U.S. to would about the should more that for Electron Tokyo

MEMS use uses mention we their which is We see -- -- a critical use don't but this customer in equipment, is product and they our I this part factories. And want don't us to as that supply that customers. the we impacting I customer. make U.S. ASML a large a they much. name, to

very million, to a business, maybe change that expect $XX frankly supplying of we're business, we're ASML. it's We customers And see huge because profitable. the a million in $XX not don't

callers At this queue. no additional time, in have we

I'll call. Jason much, the conference very now conclude you ask Thank John. to

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

you. course, of on if John, the our questions, number is free me feel do follow-up information, could as the webcast. give call the on release. available are or me have you earnings our website, the to releases earnings appreciate much email conclude this All If it. you call Thank and replay And

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may disconnect. You now