THOUSAND OAKS, Calif. — (BUSINESS WIRE) — April 28, 2021 — Teledyne Technologies Incorporated (NYSE: TDY):

• Record first quarter sales of $805.7 million
• Record first quarter GAAP diluted earnings per share of $2.23
• First quarter adjusted diluted earnings per share of $3.02 increased 39.2% and excluded pretax charges of $39.0 million ($0.79 per share) related to the pending acquisition of FLIR Systems, Inc., compared to prior outlook of $2.55 to $2.60, which also excluded FLIR
• Record first quarter GAAP operating margin of 16.8% and adjusted operating margin of 17.5%, excluding pretax charges of $5.9 million related to the FLIR acquisition
• Record first quarter cash flow from operations
• Raising full year 2021 adjusted earnings outlook to $12.00 to $12.20 per share, which excludes charges and income related to FLIR, compared to the prior outlook of $11.25 to $11.45, which also excluded FLIR
• Expect to complete the acquisition of FLIR on May 14, 2021

Teledyne today reported first quarter 2021 net sales of $805.7 million, compared with net sales of $784.6 million for the first quarter of 2020, an increase of 2.7%. Net income was $84.7 million ($2.23 diluted earnings per share) for the first quarter of 2021, compared with $82.2 million ($2.17 diluted earnings per share) for the first quarter of 2020, an increase of 3.0%. In connection with the pending acquisition of FLIR Systems, Inc.​ (“FLIR”), Teledyne incurred pretax charges of $39.0 million in the first quarter of 2021 which included $33.1 million in interest and debt expense related to obtaining permanent financing for the pending acquisition and $5.9 million in corporate expense for related transaction costs. Excluding these charges adjusted net income for the first quarter of 2021 was $114.9 ($3.02 per share). The first quarter of 2021 included $1.0 million in severance and facility consolidation costs, compared with $10.4 million in severance, facility consolidation, acquisition and certain changes in contract cost estimates for the first quarter of 2020. Operating margin was 16.8% for the first quarter of 2021, compared with 13.3% for the first quarter of 2020. Excluding the expenses related to the FLIR acquisition, adjusted operating margin for the first quarter of 2021 was 17.5%. The first quarter of 2021 reflected net discrete income tax benefits of $6.3 million compared with net discrete income tax benefits of $4.2 million for the first quarter of 2020.

“We began 2021 with the best first quarter sales, earnings, operating margin and cash flow in the company’s history,” said Robert Mehrabian, Executive Chairman. “Furthermore, we achieved these GAAP results despite incurring significant expenses related to the pending acquisition of FLIR. Excluding expenses related to FLIR, adjusted diluted earnings per share increased 39.2% compared with last year, primarily by maintaining the lower cost structure achieved in 2020 through reductions in force and initiatives directed toward improved margins. Sales increased in nearly every major business category except commercial aerospace. In addition, operating margin increased significantly in every business segment. I am very pleased with the breadth of our performance across both our commercial and government businesses. I remain especially excited about Teledyne’s future, both individually and even more so when combined with FLIR. Regarding the pending acquisition, our respective stockholder votes are scheduled for May 13. Pending stockholder approval and satisfaction of other closing conditions, we expect to complete the transaction the following morning.”

Review of Operations

Comparisons are with the first quarter of 2020, unless noted otherwise.

Instrumentation

The Instrumentation segment’s first quarter 2021 net sales were $286.5 million, compared with $285.1 million, an increase of 0.5%. Operating income was $59.4 million for the first quarter of 2021, compared with $50.8 million, an increase of 16.9%.

The first quarter 2021 net sales increase resulted from higher sales of environmental instrumentation and test and measurement instrumentation, mostly offset by lower sales of marine instrumentation. Sales of environmental instrumentation and test and measurement instrumentation increased $5.5 million and $3.2 million, respectively. Sales of marine instrumentation decreased $7.3 million. The increase in operating income reflected improved margins across most product categories resulting from ongoing margin improvement initiatives.

Digital Imaging

The Digital Imaging segment’s first quarter 2021 net sales were $263.3 million, compared with $246.7 million, an increase of 6.7%. Operating income was $52.0 million for the first quarter of 2021, compared with $43.8 million, an increase of 18.7%.

The first quarter 2021 net sales primarily reflected greater sales of industrial and scientific sensors and cameras, detectors for space imaging applications, as well as geospatial imaging systems. The increase in operating income in the first quarter of 2021 reflected the increase in sales as well as improved margins across most product categories.

Aerospace and Defense Electronics

The Aerospace and Defense Electronics segment’s first quarter 2021 net sales were $151.2 million, compared with $156.3 million, a decrease of 3.3%. Operating income was $28.3 million for the first quarter of 2021, compared with $13.4 million, an increase of 111.2%.

The first quarter 2021 net sales reflected $10.7 million of lower sales for aerospace electronics, partially offset by higher sales of $5.6 million for defense and space electronics. The continued weakness in the commercial aerospace industry has negatively affected sales of aerospace electronics. Operating income in the first quarter of 2021 reflected the impact of a lower cost structure due to actions taken in 2020, lower severance, facility consolidation and lower research and development costs. Operating income in the first quarter of 2021 included $0.2 million in severance and facility consolidation costs, compared with $8.2 million in severance, facility consolidation and certain changes in contract cost estimates for the first quarter of 2020. Research and development expense was lower by $4.7 million in the first quarter of 2021, and primarily reflected lower spending for aerospace electronics.

Engineered Systems

The Engineered Systems segment’s first quarter 2021 net sales were $104.7 million compared with $96.5 million, an increase of 8.5%. Operating income was $14.9 million for the first quarter of 2021, compared with $11.4 million, an increase of 30.7%.

The first quarter 2021 net sales primarily reflected higher sales of $8.7 million of engineered products and $0.3 million for turbine engines, partially offset by lower sales of $0.8 million of energy systems. The higher sales primarily reflected increased sales from defense and other manufacturing programs, as well as electronic manufacturing services products. The increase in operating income in the first quarter of 2021 reflected the impact of higher sales and a greater mix of higher margin fixed-price manufacturing programs.

Additional Financial Information

Cash Flow

Cash provided by operating activities was $124.9 million for the first quarter of 2021, compared with $76.4 million. The higher cash flow from operating activities for the first quarter of 2021 reflected improved working capital management, which included a focus on inventory reduction initiatives, partially offset by higher income tax payments and after tax payments of $2.8 million for expenses related to the pending FLIR acquisition. At April 4, 2021, net debt was $9.1 million and comprised of cash and cash equivalents of $3,234.2 million and total debt of $3,243.3 million. At January 3, 2021, net debt was $105.4 million and comprised of cash and cash equivalents of $673.1 million and total debt of $778.5. The higher cash and cash equivalents balance at April 4, 2021, included the proceeds of debt incurred to partially fund the pending acquisition of FLIR, described below. The company received $10.8 million from the exercise of stock options in the first quarter of 2021 compared with $10.2 million. Capital expenditures for the first quarter of 2021 were $17.6 million compared with $20.2 million. Depreciation and amortization expense for both the first quarter of 2021 and 2020 was $29.3 million.