TDY - Earnings call transcript Q4 2024 | Teledyne Technologies Incorporated

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Operator

Welcome to Teledyne's Fourth Quarter Earnings Release Conference Call.

Here's our first speaker, Mr. Jason VanWees.

Jason VanWees

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

Edwin Compliance CFO, George will Steve Joining Robert and Robert, Melanie George Teledyne's Edwin, are General Blackwood, Secretary. Senior Roks; Counsel, answer After EVP, CEO, by Chief Bobb; and me we COO; and President your and President Executive Vice Steve, Cibik, questions. and Officer today Mehrabian; Chairman, remarks

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

Robert. Here is

Robert Mehrabian

Thank we Fourth you, In non-GAAP fourth the and quarter. good -- from you full thank and margins. were records. first the earnings quarter and quarter, joining accelerated everyone, our full earnings fourth year many sales for per and increased call. all-time third Record as X.X% Jason, year share records, quarter achieved morning, and were non-GAAP operating

capital $X.X business Micropac in continue that, XXXX We the markets. of commercial the -- the our despite fiscal completion carve-out and optimistic the portfolio ended the in transaction of and both entered we successfully Finally, we billion of with defense flow year the quarter. expect in XXXX, very beginning annual given about free at leverage our record to a first low Excelitas fiscal acquisition cash closed deployment XXXX. We

[ in Our is short-cycle XXXX. XXXX improved eased ] and comparison businesses throughout commercial

current unmanned solutions, our environment. businesses, platforms well positioned favor products appropriations, versus customized the highly We in purchase are orders protected also believe versus which manned standard versus defense and

may outlook, acquisition Nevertheless, especially carve-out, be we XXXX closed. Micropac, the including but bit believe with Digital given strong has now double this at since that to the Imaging of our Edwin, excluding yet Excelitas cautious not call prudent U.S. our X% I center the dollar, at X%, range. it's amount approximately grow outlook of segment. sales non-GAAP performance turn the comment very believe the further who earnings We to our of approximately will XXXX over acquisition a on in the will

Edwin Roks

is as I represents a to on increased first Fourth This Robert. segment, quarter portfolio. you, sales and which systems XXXX FLIR's Teledyne's reflected across performance Digital air record approximately commercial XX% systems, will sales with of year. Teledyne [ Edwin, The maritime X.X% report well Thank Digital FLIR, imaging were last compared and hardware [ countermand as Imaging of software. ] Imaging healthy the and ] at and largely infrared defense record growth streamline

industrial While the declined sales level at vision to machine in year-over-year, were quarterly XXXX. sales markets highest

to Our imaging business continued legacy space-based grow.

discretionary X dental contribution contribution balance higher sales. report year-over-year, than in vision health year-over-year sequentially radiotherapy as George Non-GAAP FLIR, more to declined for of improved consumer markets the machine the will on Teledyne. the the of from offset margin decline other now which which segments represent sales detectors cancer some resilient, While and X-ray such more year-over-year. due businesses margins operating were care primarily

George Bobb

The test and a Edwin. consists contributed businesses, environmental marine, which under XX%. of and our segment measurement Thanks, Instrumentation little

well defense increased energy to sales as each line. instruments environmental year, Sales total segment, increased major laboratory strong instrumentation greater due and For as instruments. sales. growth both X.X%, versus XX.X% due to of in marine in of sales with increased the XX.X% instruments Sales quarter product of the fourth offshore overall subsea safety air last primarily quarter

protocol oscilloscopes, margin include increased which improved of systems, measurement the X.X% basis in and Instrumentation the to Ethernet XX increased consecutive fourth analyzers test traffic non-GAAP a basis points to and year-over-year. record generators, XX.X%. for a points operating quarter sequentially and and basis electronic XX on quarter third of Sales XX.X%

which and increasing In sales driven fourth segment roughly XX% electronics defense Aerospace growth quarter Defense basis represents and the Electronics of sales, XXX points. non-GAAP GAAP products. year-over-year, segment, increased by X.X%, segment Teledyne Overall profit operating of increased margin with over

sales, For quarter the approximately to X% which XX%. contributes segment, increased fourth overall Engineered Systems revenue

cost certain Robert. higher now to on programs. segment will profit to complete I call back decreased operating However, due pass to the estimates

Robert Mehrabian

of deployment. Thank you, when tradition XXXX, shares George. comments is, we felt capital prudent we conclude opportunistically I'll with continued flexible undervalued. In stock our we were a That on our allocation. and very capital few repurchased

the willing [ rational, at and acquisitions. Micropac thought to as when were and to repurchases, ] more same we the own then announce time, we're pivoted stopping acquisitions large valuation Excelitas unreasonable. we more price But recovered form M&A became pleased and expectations we our were markets by partially While

continue cash discipline capacity our of exercise balance turn the now Steve will as $X.X Nevertheless, I the Given Blackwood. always flexibility and free pipeline done. is years, we have in billion and healthy. to in remains will to flow highest our over sheet XXXX, call M&A over we

Stephen Blackwood

removal I for then To quarter XXXX Robert, and quarter Thank begin, $XX.X higher approximately share a reflect by you, our some were discuss half, offset good of million Remaining will of of morning. earnings and benefits tax non-GAAP outlook. first $XX.X first financials the tax not rate. Robert, and fourth per I will discuss by FLIR benefits. our quarter tax million year the full additional covered acquisition-related

of tax Capital in improved flow $XX XXXX. in with flow, due $XXX.X but is performance. fourth activities quarter, less Cash from XXXX flow million operating from increased flow XXXX. quarter capital cash fourth that Cash also $XXX.X of due capital operating expenditures, was in XXXX the compared with million $XXX.X fourth the was $XX.X in income In quarter, the were million fourth to payments, compared activities to $XXX.X million XXXX. in in million primarily to compared working expenditures cash lower million the quarter

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

We $X.XX the approximately just net $XXX billion of free billion. cash For approximately $X flow million. the $X.XX is with full less of ended year That of billion debt. debt, XXXX, was year cash under

Now $XX.XX, Micropac, Excelitas acquisition in quarter but includes excludes turning the not fourth to $X.XX outlook, range be which of $X.XX And per share, range share call per in and that now be the of pass of to share of per $XX.XX. non-GAAP in closed. $X.XX. per in GAAP earnings the earnings earnings the I our with for believe the will believes range with per $XX.XX GAAP has that carve-out, earnings in the to the the Robert. year share which will currently the non-GAAP yet of $X.XX $XX.XX of to XXXX Management share to we to XXXX, back full will range

Robert Mehrabian

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

Operator

[Operator first Our Instructions] with question Sachs. is Poponak Noah Goldman from

Noah Poponak

everyone. morning, top you and XXXX Micropac? the X% X% organic? referenced in or that that that organic guidance. growth line X% a Good is -- Is Robert, from Or is point

Robert Mehrabian

Valeport, year acquired up I that for in add Noah, marine of part Those we you about X% include over is, we acquired what Digital and X.X% but -- acquisitions. Micropac, as little for of it's through and Adimec Acquisitions our the businesses the which said, organic earlier about a to also a No, Imaging. mentioned they X%, X.X%. include part

X% -- total X.X%, is So yes.

Noah Poponak

what Okay. schedule, you if in earnings about can to on And year? revenue, closes Excelitas talk that EBITDA, adds the

Robert Mehrabian

Yes.

to say, I'm going depends clauses, you can as it about on any a But million appreciate. think I month, Noah. $XX

Noah Poponak

Okay.

better. X sounded -- the you your it Hard short like were It All Okay. then better it moving guess how quarters seeing long talk organic like cycle. of a still versus slightly maybe the but better. kind still had X% Great. mean, much short for your referenced of the And we've kind look to leading I could long if in target. about I there tell looked discussion or a you a few just assumption. of looked indicators cycle, little strong. cycle this cycle release, over you now

those in the recovery assume you machine and go So how kind in seeing in to those did And are what of vision you guidance businesses about what deciding businesses? instrumentation? in

Robert Mehrabian

Okay.

with I'll should make by as target clear. organic about is which it On growth -- agree, an it me X.X%. do is So basis, start segment, may, let I if our you -- and I

organically. the to you subsegments marine, those If instruments, go environmental and grow to Imaging organic just believe Digital will measurement, growth which Engineered we're X.X%. just X%, organically and combined total X closed, you Systems, all Digital and test assume we jump includes we Imaging, acquisition a under up Defense. grow of of it X.X%. In about will grow that with X.X% expect to will then that X%. targeting Aerospace it Right X%. we Micropac once maybe now, include we But at

is of and summary the the the growth. kind of segments that So

So grow in in single we the to mid-single other words, digits. organically to everything Noah, expect lower

Noah Poponak

Okay. appreciate detail. all I that

Operator

Our is Jefferies. Konrad Greg next question from with

Greg Konrad

last bit about And thinking how defense? health kind year have me Can care to that put lot of stuff the weaker maybe into of you're was XXXX, Yes, recovery? unpack maybe digital a and what vision, in seeing know I year, in finer they a cycle a But just short outlook, starting how thinking FLIR. you're little point next FLIR mean out on that with just of imaging upfront. and kind like you're both I what don't the quarter you called you maybe about

Robert Mehrabian

Yes.

our FLIR. Let digital me imaging between and I'll and historical break And do it 'XX up FLIR [indiscernible] then 'XX. before

small $XX we a with kind have, it FLIR dimensional area about So had over a X vision in million. 'XX, machine which Primarily, by a 'XX declined overall. is that which scan, little in business we deals That business. of was back mid-market held growth

kind that year-over-year, as much. both microbolometers take increased of and but instruments ]. It increased down out, it [ So cameras. increased well million Raymarine a bit, [ our sell, FLIR which antimonide as infrared, It almost we businesses if And cores rest $XX steady. areas. not increased all little in you our cores, tomography, of held about were in the ], They actually and in iridium

did increased. FLIR it its X%, in well, did really of about So well. and subsegments Defense and overall, all various increased FLIR

itself we're about good to a cautious about are very FLIR very, defense because the have X% businesses. but really little we forgive But by still businesses we increase increase we still healthy FLIR businesses. me. about going little now about X.X%, 'XX, So the a backlog. the we're there because X.X% think cautious overall a camera assuming But will are commercial to

of is in If that midyear. you what be our growth before from about imaging we modest. FLIR, we the acquisition X.X%, comes did to would some but we think going Overall be growth the call that go to digital traditional Adimec

it's you if So out, subtract X.X%. closer to

the total about for up, imaging So add X it's through would both you be acquisitions digital organic those growth, when overall and X.X%.

we're have bit had commercial legacy tailwind we're We part cautious reason while a of in a being little think about part we the that's course, exchange, that the of especially going this to going is little quarter doesn't the foreign X.X% especially And -- imaging, affect right we have strong, the of from digital because XXXX. going into to being us. now headwinds change, if dollar with

So your we're answers that as into it projections hope go programming our in of we question, kind Greg. forward. I

Greg Konrad

good. And you I then implied like EPS, follow-up. That's margin it expansion maybe good into have Yes. mean, XXXX. seems a

the it mix maybe that in margin seem tailwind be the you markets, of XXXX. which seem much in and Can maybe the a think of I given that maybe like expectations? past, it would set increases any you're drivers, embedding mix volume some like outlook big short-cycle about talked given just doesn't you've just of level doesn't

Robert Mehrabian

We Yes. company. go overall the let the We finished me at -- XX%. year through

basis by grow We to expect XX that points.

the it'll more look you points. segments, at if basis XX Now like be

year XX.X% from So what it'll the full XX.X% go XXXX for in 'XX. is now to

there's there. So growth

we from go larger at the we'll year about business, is segment margin operating significant. a year. Imaging, XX which segment, you non-GAAP If Digital get is think We the XX.X% basis obviously points, for to the finished which

less, year, points. XX XX but and a between basis Next little maybe

we've XXXX. had segments, margin strong other the of since growth very Some

points. basis For 'XX example, 'XX between margins our and XXX in instruments, grew

acquisition Primarily XXX in excellent it being is in thing the of other we points. cautious enjoyed we're last growth to XX.X% of basis will and also the cautious. kinds which that in where not X XXXX. we're we've little grow And margins more little have Defense, Aerospace is the a when you years, XXXX, So really into the Maybe XX had go to basis -- going Micropac XXXX. a were in there, initially going because points that

XX, So increase dialing because the effect. basis in maybe XX Micropac of points

do. I margin enjoying is all we'll our of start Of answered that course, once question, hope thing in that Greg. expansion properly, tucked acquisitions like your

Operator

Andrew next from Our BNP. is question Buscaglia with

Andrew Buscaglia

you're about X.X% understand organic. so to talking trying Just XXXX, with

you would And bit on? include the -- cadence clear, assume little then you be a in much of number? about your and year recovery that short organic as some you to do how do some FX cycle that Just goes talk Can the assume estimates?

Robert Mehrabian

Yes.

First, Yes, from headwind FX. do account we

at mentioned, present the I time, X.X%. As it's

we So basis because year, happen, it we dialed to don't XX points in obviously. tailwind. bad. Because year, This going was basically not FX was know that what's this actually,

have we So big a headwind.

that. that's So

FX non-defense would part second then, course, question the X.X% a but our imaging cycle. modestly. The single about in while most from for as will the digits. little that we think environmental of measurement And short less. test of of I lot like historical comes digital because that your mentioned our and And as of a low partially, I mentioned, think would growing, businesses of grow of year, should was short-cycle We defense FLIR part be modestly grow and grow before, the

Andrew Buscaglia

Okay. do you accretion -- or Excelitas should on to some you And say, closed? non-GAAP once the earnings acquisition, 'XX that's assume in how [indiscernible] we would

Robert Mehrabian

whole we depends at And a the full well, it's month I million think year, things question, how think full year, as not about costs. it think subsequent talking bunch always years. in a we about just $X.XX a $XX think -- in for I answered But which were in an But it accretion. it I of Yes, we of should to give margin we acquisition, a I bring revenue. to in us look we'll $X.XX for year, if have doing in expansion, much if full it do again, Noah's --

Operator

from Our next Karas with UBS. Damian is question

Damian Karas

Hey, good morning, everyone.

Robert Mehrabian

Good morning, Damian.

Damian Karas

trends have was maybe could a versa? Morning. appreciate months of us I if picked you you've maybe there you just up any sense meaningfully more you Are better provided. order X vice been give had expected for bit all that seeing? that the wondering Or color little than I the ago? areas

Robert Mehrabian

to and company book-to-bill Yes, finished X.XX. bill, book quarter, Overall, to just I'll we for Damian, let me go the with start is recent most about the QX.

instruments, it's various In X.XX, pretty for between but is varies positive, is the book us. it which businesses. So high example, bill for to

marine cautious it's that X.XX, X.XX. is X.XX whole little We're on T&M. a then is We below the think a Our year. little And business environmental maybe leading by just positive, X.XX. X, for

is FLIR at X.XX. positive Imaging, Digital

are in below at X but AD&E they have Our little we into X.XX, Engineered lumpy, is X.XX. consideration historical are X.XX. slightly imaging take is is System, to a the our at which orders as that

So overall, our positive we in think we book-to-bill. have trend a

you specific vision, the it of some areas year, primarily and recovering. had Digital machine where to we in Edwin as is mentioned, of have our Machine very go last commercial we've if Now Imaging, machine vision headwinds, sensors. is in --

lags X folks, increases to X throughout it's So sensors, recovering that detectors We've other it had the always for slowly, recovering. order make months. Machine in me we where the but is year. mind,

half the XXXX. answers closer I that think recovery we to be So of second your will hope question. that

Damian Karas

my new department and obviously, about quite Yes, with there's an of helpful. certainly quarter And maybe us efficiency. China of thinking and the a question Could customer U.S. yours, come in. so administration that's has the a that's Mexico. important policy second this in bit changed since potential very tariffs is an you new question, implications? government give and last updated There's And government of election

for your thinking you might Teledyne? what could all that about So it on how share maybe thoughts of and you're mean

Robert Mehrabian

our else, am it Please can anybody not I to more but knowledgeable businesses. I relate remember any Yes. that than

first. Let's about tariffs talk

shortages, prices. challenges. had experienced supply that all but What COVID. XXXX. these had of If couple increased improved margins. you peak us of only about we years, back also, coming million in cost do? did out our we businesses We chain XXXX, That where look right, we we of some a $XXX Not in We could,

and X between it for up made we our So own efficiencies. those then

XXXX, the would what as much. half Mexico the maybe the we experienced than tariffs initially, impact Canada, way be those least or out, think China, laid less at we in The of are

can that. So we think we deal with

The other the is the thing of tariffs. sophistication

yet We and countries, products finish we that have make then the Canada we in products U.S. off into because in to it dive make different in we

for export, consumption. we it's sometimes Sometimes domestic

said But with value deal think can the we all So that. of add changes. we having that,

In businesses, example, is terms as partially of products businesses think the our protracted with of it would compared defense [ partially order dodge purchase us efficiency, favor because ] I most rather -- kind others, than of appropriations. that because we have an to

unmanned in are also We platforms.

almost we vehicles, all unmanned you ground it's $XXX-plus and which vehicles have underwater air million. our If X, take vehicles,

of Our also of standard and platforms versus platforms. our than our rather on products lot are manned those And A lot customized a solutions. very sensors go products unmanned. highly are

okay. So I be we think will

Damian Karas

Appreciate color. all That sense. makes the

Robert Mehrabian

For sure. Thank you.

Operator

America. question is Lyons [ with from ] Our next Jordan of Bank

Unknown Analyst

On the of I defense the conservative? much outlook, expect look outlays being to momentum FY 'XX, we growth, when how would to organic the 'XX XX% that X% from is up at Just continue.

programs are there it's is So there -- just bag? are mixed a ending? that Or

Robert Mehrabian

number. know don't I if Well, X% the

As QX in X%. and -- FLIR, grow we It we this defense I almost approximately think in growth. be to another our was year than next it mentioned, expect will X%, our grew FLIR businesses higher

So not is as conservative. that

the then systems fields various that is forward. take primarily, know which unmanned problem programs observations as those favor of electronic are warfare, and large, EOIR, -- what's I where us of which then course, going if happen and in, and programs of regardless we're really, the Now don't yet. we to that the to using you by course, mentioned, But go the

our of businesses. part about bullish pretty defense I'm So the

Operator

& question next with is Our Ricchiuti from Needham Company. James

James Ricchiuti

legacy at Robert, recovery imaging digital slow by business? all the surprised are in that you

Robert Mehrabian

to in own is businesses. we are especially inventories, building digital of up even total X, up very They both effect, large, But can do their a the really, honest, though systems own their are cautious And are don't building Jim, imports, Yes. by and export it's To weeks. in must our terms that China, on China very I short-cycle imaging. am. sensors. people be their distributors. Partially, company and it of because they partially in Part as X, X we these turn

have of what I very visibility. It's So are predict we talk And happened. about a things don't can hard to lot where only going.

book-to-bill, billing positive the in -- book-to-bill even quarters. look you're camera -- last healthy. you looks businesses X if is book-to-bill been overall, at though low, enjoying for We've when -- book-to-bill But our is the

all So why of said as fast not as having I that, it's surprised on yes, was we recovering should.

think I partly distributors. it's our are building in as are people conservative because other inventory,

last or their won't is they customers frankly, prices business those trying us. the I'll the add pay lower to are And we business take is. of to because -- And what orders our question answer some would that is the

just margin not get we're to lose Now to revenue. going

James Ricchiuti

appears full and Got helpful. -- it. indicated, that That's outlook. year be you I the that there conservatism And it think embedded some to commercial in business within appears

at would have potential destocking it to maybe that to little we a starting for people If some be maybe come you some look get the about say as now? you better, would back Digital Instrumentation the talking business, were Imaging a to through that been areas potentially business this while or do have of of the in things

Robert Mehrabian

Yes.

start the I Instrumentation. think I with will

better the gone could much the which out, We're think on primarily as lot of new and be growth conservative the assuming more it's XXXX. so, year in products more but measurement. we is X.X% Digital will be going going test slew we Instrumentation, be a doing in and of a because have it is been frankly, or Imaging, In to and competitive. has better there Some

be always that, this are we said that Having yes, or we've to prudent being at time, conservative So been conservative. it's everything we do in But conservative. say.

take have So to consideration. that you into

Operator

Our is Giordano next Cowen. from question Joe with TD

Joseph Giordano

[indiscernible] year. for the

Robert Mehrabian

you think got Joe, I cut off.

I The sentence, it. get didn't first

Joseph Giordano

year. cash asking I'm just for outlook free the about flow

Robert Mehrabian

Yes.

We hit $X.XX some but some think a had because well. our programs. so billion. like all that, it'll be did think billion If had But I'll billion, advanced in happen. reiterate, lower having good again, $X billion improvement is Steve happy. be We free working enjoyed $X of as this I to said some We we of taxes, bidding number. not we we and also inventory. cash I one flow payments We on some Just over mentioned. Those capital may got $X

Joseph Giordano

flexible often has then other cash with who currently class on in consistent shown But buybacks of you've question been look to at you've guys generation and lately, is free all calls can't a Teledyne. given the flow of a the to have question bring in bit know be from I ability to the this get asked it's who your with we fairly a and been answers. the you more investors new And at dividend you to interesting shares? But want investors invest

Robert Mehrabian

it. a tough That's one. That's

lot acquisition pipeline although just way if said know, that, know cash I to has what off good, think that. our be You Having undervalued, is stock, don't money stock to will buy of it richer was thought our I think we we when I which the But dividend, another we're back bought companies, especially a been. returning investors. of since than seems better we little a can do to our now, right use that do companies

Joseph Giordano

Yes.

get larger be it's a people time, over will the For hearing, with view but from that it what we're if what there's we're getting. could fine feedback small that's worth, just dividend a somewhat

Robert Mehrabian

Thank that for you input. Thank you.

Operator

like further back at you. to would Jason any this There VanWees the hand questions no Thank comments. to time. closing I for over are floor

Jason VanWees

this thanks, morning. us Again, everyone, for joining

you, Thank If on And webcast feel on you available earnings the the please questions, free call dial-in. again, this follow-up to and release. of via operator. number have by a is replay me

we'd conclude Paul. it. Thanks, the you Bye. If appreciate call,

Operator

conference. today's concludes This

your You your Thank participation. you this for lines at time. disconnect may

Teledyne Technologies (TDY) 22 Jan 252024 Q4 Earnings call transcript