Teledyne Technologies (TDY) 23 Oct 242024 Q3 Earnings call transcript

Ladies and gentlemen, thank you for standing by. Welcome to the Teledyne third quarter earnings conference call. [Operator Instructions] And as a reminder, your conference call today is being recorded.

I will now turn the conference call over to your first speaker, Jason VanWees. Please go ahead.

you. Thank morning, good everyone. and Hello, is Vice VanWees, This Chairman. Jason everyone Third Quarter I'd like Earnings Teledyne's welcome to Call. And XXXX to Release Conference our morning. this earnings released We earlier

Joining Officer CFO, and ask Steve Mehrabian; and Melanie Edwin, Chairman, and Teledyne's George Counsel, Steve, George After Blackwood, us for Chief remarks EVP, Roks, Robert, Compliance COO; SAP will Edwin Secretary. your President Robert and Bobb, Cibik, today are and who CEO, questions. Executive by

have to before remind that as course, But differ risks release we periodic filings, earnings tell made our attorneys and and the me get you may SEC to materially. of and all this started, to morning various caveats statements course, forward-looking of in results our are noted subject assumptions, actual

Robert. Here's

thank segment, the with third report us achieved joining morning, Jason, earnings our good each Teledyne quarter overall in growth Thank we you, in all-time allowing and sales greater expected. you for record as to year-over-year sequentially and revenues call.

see remains energy comparison businesses. We continue the cycle and defense, most our year-over-year at while short robust cycle longer to of time, commercial same sales And space for challenging, our in demand Year-to-date, stabilized of for either have $XXX $XXX recover repurchased we X sequentially. have million begun about repaid $XXX businesses gross our approximately completed debt. to of We million stock. or acquisitions million,

this of accelerate greater sales, the to against record third end future But timing period were in for flow sales backlog. cash free backdrop, Nevertheless, given once able we the and fourth were has again over the and our given X consecutive X.Xx with we ended leverage Orders than quarter the quarter some shipments the into quarter. last months. remained the record --

again compared the confident that to increase modestly fourth quarter. the remain will continue quarter third with We but only sequentially sales quarterly in reasonably

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

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

quarter last year. to industrial Third X% declined to machine less and vision declined XXXX sales compared than year-over-year. markets Sales

infrared FLIR. imaging this However, businesses from as Both offset defense detectors. imaging infrared space-based and increased was partially commercial well base by sales Teledyne for is as

quarter, us will Furthermore, healthy balance for the reduction operating margins fifth portfolio in even product now the margin FLIR represents consecutive X on of report lines. segments, the George entire contribution which the other typically helped Teledyne. year-over-year margin, business our the given sales of highest protect significant overall

consists instrumentation contributed little The Marine, our XX% of and under Measurement of Edwin. Test a Thanks, Environmental & segment businesses, which sales.

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

primarily of X.X% X.X%, XXXX. which systems, versus custom of instruments, digitizers lower water instruments tough by offset greater protocol select include due decreased Environmental Sales and electronic measurement sales comparison on monitoring to emission instruments of analyzers in Sales and decreased quarterly a sales systems. laboratory quality year-over-year

X.X%, electronics XXX Electronics and the commercial driven both and which operating non-GAAP quarter, In basis Defense to growth third on sales margin each overall products. points basis points margin XX.X% Aerospace by and in Instrumentation third in to basis the roughly XX% quarter segment, and defense Teledyne aerospace increasing represents with increased operating of a XX.X%. XXX sales, product family increased

XX.X%. basis points GAAP points to basis Overall to XX.X% with XXX increasing a margin segment year-over-year XXX segment operating profit and basis non-GAAP increased on

due Systems Engineered also which increasing quarter sales manufacturing grew programs. than basis the with segment mix revenue operating points a of to Segment margin higher less segment, XX profit sales, overall increased XX% to contributes X.X%. third and For greater

back Robert. to the will I pass now call

I'll you, on strategy George. comments allocation. conclude a capital with and few Thank

several weakness, of margins some while our to favorable. Over businesses businesses the growing increasing markets quarters, but last lowered we environment experienced was in those more and have margin these in the costs protect where

we own also During stock. this period, opportunistically our purchased

that billion $X.XX also current near-term remains healthy. fortunate our While authorization pipeline our We're repurchase active. is acquisition stock

acquisitions. began through I'm both begun difficult grow challenges, and more exit have to organically there of comparisons continue optimistic that While quarterly and are our to some -- new will always we we

I'll CFO, now our call over turn Steve. to the

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

the million tax flow $XXX.X third from quarter compared cash is XXXX Cash In flow income $XXX.X quarter operating activities the of $XXX.X million higher in with less third decreased compared Free operating flow to was from cash cash in million third XXXX. to $XXX.X payments. in capital the expenditures, million was in flow, that XXXX. quarter, due activities

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

flow million cash For $XXX.X months first flow $XXX.X the operating X respectively. cash and of activities from were free million, XXXX, and

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

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

the Robert. to I now pass will call back

answers, question go Did would your our the Operator, We questions. I you. to ahead. proceed and Thank please like to ready lose you're with now take if operator?

with the Ricchiuti from Jim question Our will Needham. Instructions] [Operator . first line of come

you area? some there I to acceleration think other Was in you coming markets perhaps some where pull-ins were in QX. sales in Or alluded the saw that? that mainly Robert, defense

think No, primarily largest bit ratings. little would was energy, a backlog, the primarily which the from businesses, Defense it different where have but we I be

about back? -- of segments? thinking like versus you respect And Got a an any you revenue with it. what how it more Can as it good And us you had you're to standpoint. terms maybe give sounds just to about months few growth quarter relates color from in order a maybe were thinking overall the book-to-bill

Yes.

the Let book-to-bill. with me start

was had healthy book first. the of build, all businesses about our with start me at except Book-to-bill businesses. the Almost the Let overall X.XX. X to of of for end QX environmental

being instruments, higher now along and X me those. Let coming over and environmental X. below In T&M of to course, go was with Marine, over X about much book-to-bill

we book-to-bill In Aerospace in of was had FLIR X.XX historical Systems Defense, Digital Imaging, and X.XX. Teledyne, book-to-bill good and excellent X.XX we what call numbers X.XX. are experiencing book-to-bill Engineered and

we've QX to we've decided uncertainty it's revenue, of that today, conflicts too the effervescent. uncertainty, decided all billion. with to and world EUR number had the we end the right with and elections or we we be prudent projected, Middle revenue X.X about then, starting now, the do And it's not prudent number that in the $X.XXX at -- maintain the course, East all might the Europe, with that Regarding but that billion various in the the in of which is better, -- Jim,

Makes sense. it. Got

turn Just quick it X and I'll follow-up over.

sequential behind Just measurement nice business like in is to Do growth. is this to business, now analogic that you looked strength feel Or had -- you? this some with the it still the weakness scopes test critical business results? respect better and the seeing are you you contributing overall the

and we're little businesses. the hesitant But at about in it the that domain. I be we pick business what up our year-end, protocol people was which In usually, projecting oscilloscope a third capital think do would happens quarter, primarily the expenditures,

we're year being that would So be than with QX. higher repeat last a of QX hopeful year this

Jefferies. of to next the line Greg go Konrad with will We

on Imaging way different different seeing mean, what businesses? we couple the of Is order of either an maybe across perspective? from a the parse negative you side. from into color I there what -- your going seeing the did or the quarter any can you're the and trend Digital see for markets you're peers end on vision just pre-announcement across vision or some Any quarter,

Yes.

larger if may. first, it picture I me Let on the slice

you If digital X segments our within imaging. that look at

scientific You our have our well historical then digital imaging, which imaging here. is have FLIR. you as as And

our X.X%. if QX, we traditional historical almost negative, big picture So what growth X.X%, declined. revenue call was digital imaging Organic was at look I the for

commercial which far vision took in of growing but we subdivisions aerial we the and of commercial well. is flare that like Industrial FLIR hand, other we the businesses very mind with the which the in FLIR, system, lower that if rest camera, On to grew. the did FLIR, our arial In keep is camera out in also basically there the essentially we negative have businesses, So systems FLIR were an within XX% just vision In also camera, have in has growth do sales, healthy. was much which the X-dimensional camera a the X.X% defense all flat, exceptionally businesses,

And some basically positive grew businesses what we Dale, now that a -- is looking of overall, going We at range and had FLIR also with there X.X% to coming. we're negative some negative.

the our the the systems of are which negatives, the talked you because MEMS, relevance micro-electromechanical really before. products growth. that is and of Let enough, or mine good to the a me Maybe give we've positives making experiencing Interestingly they're first industry. in canary that's lot semiconductor about

Defense where Digital vision somewhat primarily That and have scientific in as had well, we healthcare. in decreases were Aerospace did very business you and XX%, historical almost grew recall, and Also, systems within in may industrial our we Imaging.

I people, and there with going think more. little domain vision in camera think we a bottomed sense the industrial the of deals slow scientific systems, out, that that's I for at healthcare have a least is lag sensors recover. ourselves portion to the where a and to and And makes with we that other recovery in is it believe going

at see point. but It may a have out, this we bottomed don't recovery

would I Imaging mixed a overall, overall FLIR say the businesses day eXv, for the with lagged Imaging. different Teledyne in were carried Digital little So progress bit DALSA, the

marine, cycle, ramping you've maybe on XXXX, at about to it talk And least that's a it's defense early then, book-to-bill bit mean, little long sales. but experienced I on on positive or the whether seems

If you you're recovery can the the businesses how year, have how cycle thinking over short talk about over you look next long-cycle much year? visibility out in you on next versus maybe about the the

as long-cycle there like to Greg, can healthy. The our no grow long-cycle they're is -- We think businesses. that businesses, They're going anything it's catastrophes assuming affect year-over-year.

in our program We Defense well in in both here as have programs. FLIR space some Imaging good other wins, really Teledyne as and our

grow. to think going we So those are

through going our plans just we're year. businesses, next the first short-cycle cut the On of for

think but happens and how I the a exercise capital to too work. quarter, have it's to little see I'll wait early another more of to of people QX. elections say the here, get what I end predict to going that's the what expenditures importantly, they near kind of as months couple

in And then defense if FLIR up maybe and defense and was what just about think you one. Electronics, in across sneaking I X last A&D mean, engineered quarter? the

was organically government but we business X.X% well. really up Defense doing programs do that plus, overseas maybe have are U.S.

well counter are whole East. healthy, example, the programs, be programs UAV offers to And range doing especially been also our with which Ukraine. Hornet, as that products to seem of a in new them, well. Middle Black very we have small systems supply For some own to UAVs, winning really we We and as have those

we're very positive in domain. that So overall

We'll move line Buscaglia on BNP. Andrew to of with the

see not not do but you a see worried you Marine all a have then have next how so we're touch good -- much visibility segment about maintain in How can to been strong what -- that. that has that a to little and year. And challenging that wanted comps, do seem sustainability is you through strong I of I'm you just little bit visibility bit such growth -- out? wondering maybe year? playing on

Yes.

in being being variation around book-to-bill very me their then Marine, QX a had X.XX%. strong question. good at and Let with has of -- X.XX% that's QX kind

commercial Here's oil marine. on group. about acquired the production businesses and Those to form our interconnect oil for to XX range defense. story We exploration small Marine from

that to Virginia call vehicles both the have We what this have in from her to are whole programs penetrators class And used deal that floats underwater in Europe. then them and submarine range vehicles, country we a an the being with we military example. of as gliders for

close very to So offshore the put energy XX%, more, It's mix exploration, is XX%. it's interesting. if in you maybe maybe it's

And XX%. XX%. as But is have which are then about much construction, we then science, as have we defense, which

some kind So in Teledyne it's a distributor, a it's as mirrors, whole. ways, a of

the that but not though, that, are did to oil they in decline. that strong. current possible, may It much is XXXX expectations significantly with projections, will as prices remain as decline may Our 'XX,

if remain healthy. interconnects will And happens, of our but should have some the go there businesses that that other production down, we

positive Marine Some year. about for next

guys M&A up are you No, buying press -- perking bit looks deals you that's about specifically these And then you And any you're maybe you've your made that? in little the Can -- be helpful. been on but here. more back of comment seeing? stock, it's might release a like what comment the size on

we've every our of I is reason a our say good that's for question. since an business overall DALSA We the XB. And would like Atomic, got We've this the a acquisitions FLIR. year, imaging couple is bought Andrew, very imaging Marine. a business timely, acquired first Yes. it's for we year, time, small for done which

But us opened imaging. especially Suddenly outside the that opportunity do last And there digital more we to in seeing up. much seems hasn't activity are the to or been have funnel or for opportunities, so, acquisition. month

For as as defense example, instruments. in our and well aerospace

have look So to much how what of we can do, kind inclined at make we positively acquisitions. power we're to

know, frankly, to, And no, buying we've be that range $X.X the it more. and in And the smaller we in that to to acquisitions our -- to likely do some but or some FLIR billion wherewithal more don't was want when but we'll close time, if if to market since I are focus which highly low. opportunities. the $XX to stock there this But will as billion up large would spend on $X I we maybe XX $X bought know QX. certainly continued I won't as through much, have don't let's we more to. it billion it's we are think closer that buy things weeks It many companies say, are million at anything we be,

of TD line the to Cowen. on George move We'll from

Can you thinking how quarter? And in Boeing? guide contemplated going going what's forward about just for on talk us like you're the what's in next through

a year study because a customers. I'm and -- bunch QX. us whole that's for that as where the in risk MAX, think maybe the could We business, of it Let systems, aerospace through Boeing as is QX assuming me upside, quarter, hit could and risk start that serves revenue with as to that follow. that the that's Airbus of have but we the in $X which strike airline acquisition the XXX the the us in We data subject Boeing hoping we the kind well us. much our on could hit settles, us through million from goes other strike for as

X on that, But be maybe timing, if than X. is the strike depending settled, it less or could

So it's bit us. for a little headwind a of

lost trend I your the The for of... question of of kind me. other part was

I Boeing was move. the can first question,

was in piece business mentioned environmental revenues. color of little and on with indicated weak side or what that think you there us applications below that bit of give you a also instrumentation, what like is on that facing? a that I orders that's was markets more end Can type the You

weakness business with little air Where has Yes. have that had we of of And we've water environmental looking quality weakening. quality products. the been monitoring businesses. quality basically in little X monitoring, One deals et cetera. is a side, and we've discovery There, at stack that drug our a and seen In sets okay.

depend they a systems. bit large our where little on But we buy and East Middle systems,

Nothing QX little about be weak I'm but few than It's not might happen. to I dollars, concerned a million we is going be it. a -- that just should a think think bad it little QX. better

Marine, doesn't now. as -- An includes and environmental. well me as concern So right instrument it said, Measurement George Test as

for in And were margins good. The just last me. DI

what color are year drove I maybe up here? some margins the on wrap think some the portfolio how you to thinking to across excess. than probably Can you us give about that? And better

imaging healthy. at FLIR. mentioned, have would And here, basis we're relatively down XX a very you points margins. went was is really flat in same And whole say you much. 'XX, the versus the year, whole digital improved what think very course, if maybe look as 'XX I of I as margins FLIR's -- remains I

side, lower FLIR helped that revenue. and take margins the of camera, compensate the to were Edwin On his for able some people to protect health especially camera cost our in businesses in our out those businesses. some in And care and

of business. Some are camera in businesses our the high-margin very

the And Digital I'm of we taking where out, had very cost the very And So not out. turned in the cost put Imaging, with with really comes strong, that cost there's in good the we out back back FLIR, been will the hoping past, as Imaging, in have cost experience -- we've be and of the put combination. defense. the Digital very didn't rest took healthy. that recovery course, because Marine there quickly to margins

overall, about positive So I'm Digital Imaging.

just if those a because how there I sensor cameras and Is you way big -- of high drag margin. a scale businesses know are kind like very

So margins? what would of those drag reporting say businesses a are you on how like for you're currently much

but overall. are I drag in for ones our million, I'd those would maybe say, that businesses. lot, drag overall, $XXX million seeing -- a margin say we're those highest the like sound on would $XX say those maybe and in the Doesn't account I it businesses businesses changes, a but

down, said book-to-bill cameras goes than think because out, the X. better then overall margin declines we've before, revenue as we the the is bottomed But when have so And of that.

come will right sensors course, Of but last away. remember, compared to low eventually, is year. and deal not

the Jordan to of with of next Bank Lane go line We'll America.

programs X. color about us like new some Replicator you're you opportunity FLIR's around how give Could for thinking just

programs whole of FLIR really have take that doing bunch this well. me we Let are for a

in we Let's picture good it automatically, your about inches UAVs with to XX can UAVs, you size. wouldn't best flying are a small X the but the in they video small not are system room away. do, the were X -- of the up UAVs. in or start These grow probably have The you'd get it we that world. hear to If kilometers it

munitions. we're carry content really have we in being introducing, have that's on example used a which The system people's is another an UAVs can the they that it's can't Europe. enabled time, call that's UAVs we if difference But this reach can between and is also these we back side, and the the good. other target we munition So system. that so other UAV opportune not And loitering recover

us overall, for think the very So I strong. business UAV is whole

We suite win biological, a that of for just million. for we on a program program like go of other bunch also chemical, just nuclear, $XXX whole that we -- a in announced have programs a announced sensors won we

we're positive. defense, clear far So especially very

have excellent we're there very We leader an and business. that positive in about

X then it. counter so systems. Replicator for Got And UAS specifically

right We can I it's have that a and this That's all system is deployed, which in say . successful. with now Casper being time. at about Europe

Capital to Freedom go Hardwick [Operator next We'll Markets. Guy Instructions] with

about lot point is mix higher cycle picture. recover my a at XX% of but of sort and in Imaging what the If the think you've peaked some next A does year, you short big incremental short potential margins questions given what back. terms have years at of of -- said of been margins the answered, margin kind just cycle? Digital few

if XX.X%. look in our Last about like year, QX, QX, were Yes. time, I if this at more look overall I margins imaging Right are digital they now, XX.X%. at

minimum to And last be the businesses which there's for healthy strongly, be an So very back that hazard above go year. for I should guess opportunity a XX%, us as come us. short-cycle as as would if good do a would

then in that But go I the would our of more longer XX.X%. if especially we'll would sensors the plus -- higher. recovery our recovered, maintain percent, go But margin XX.X%, probably uncertainty, with XX the

more that's cycle? see in statement has us assume stabilized because give cycle maybe a Obviously, color booking as short Okay. of that you the indicated trends Can and improving bit booking a And just you on trends. maybe follow-up. short I in just you

talking the In in I above than mind be. book-to-bill, to build is talk last book-to-bill that's about used months, X, X our But lower X Yes. we say, X.X. we're to always keep have that to let's it when

not So the like system. I overstate It's of to book-to-bill don't at height want that. the

is book-to-bill So The side we recovery. that that and yet. but has we themselves, have bottom -- -- the the reached on what tells sensors flip not us recovered

money a So then we're developing -- a because people to they little for of the cameras, have spend little to acquire on whereas them are easier sensors it's more haul camera. longer hesitant

and the have both Industrial FLIR the cycle, new really that again, that say, decision, is easier going decisions with I with cameras that side, to infrared for they're products cycle so with FLIR as In long expect that there are we're FLIR do cycle very the that short bring because back the that cameras pleased had have done And flip in been well cameras. to The continue domain. they'll short has has so make cycle we they cameras. fixed enable And FLIR customers, successful we in businesses. we're to intelligence positive artificial long

be that the what Robert, is And point Is to called referring what you're point gray? used that to? --

have kind organization more more I it of talking infrared is put a aligned that matched it X was gray we leader to from in we substantial. Part the cameras an that while was offering to is with No. FLIR, what reports Actually, the it's standpoint, the the that's in about

queue further in no time. have this questions We at

Thank our much. ask you. Jason conclude I'll very please. thank Operator, to call, you now conference

everyone. thanks, And Robert. Thanks,

at information any end Thanks, you ideal. earnings be on free that then, Goodbye. everyone. course, questions, would give the to is the you my And please . if the call, feel please the have release, If Alan, follow-up call me. of number of replay

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