THOUSAND OAKS, Calif. — (BUSINESS WIRE) — April 26, 2023 — Teledyne Technologies Incorporated (NYSE: TDY)

• Record first quarter sales of $1,383.3 million, an increase of 4.7% compared with last year
• First quarter GAAP diluted earnings per share of $3.73
• Record first quarter non-GAAP diluted earnings per share of $4.53
• Record first quarter GAAP operating margin of 17.5% and non-GAAP operating margin of 21.1%
• Record first quarter cash from operations of $203.0 million
• Completed the acquisition of ChartWorld International
• Full year 2023 GAAP diluted earnings outlook of $15.80 to $16.05 per share and reiterating full year 2023 non-GAAP earnings outlook of $19.00 to $19.20 per share
• Reduced gross debt by $400 million, including a $300 million debt maturity payment after quarter-end on April 3, 2023

Teledyne today reported first quarter 2023 net sales of $1,383.3 million, compared with net sales of $1,321.0 million for the first quarter of 2022, an increase of 4.7%. Net income attributable to Teledyne was $178.7 million ($3.73 diluted earnings per share) for the first quarter of 2023, compared with $212.6 million ($4.46 diluted earnings per share) for the first quarter of 2022, a decrease of 15.9%. The first quarter of 2023 included $49.7 million of pretax acquired intangible asset amortization expense as well as $0.3 million of acquisition-related discrete income tax expense. Excluding these items, non-GAAP net income attributable to Teledyne for the first quarter of 2023 was $217.2 million ($4.53 diluted earnings per share). The first quarter of 2022 included $53.6 million of pretax acquired intangible asset amortization expense as well as $50.0 million of acquisition-related discrete income tax benefits. Excluding these items, non-GAAP net income attributable to Teledyne for the first quarter of 2022 was $203.9 million ($4.27 diluted earnings per share). Operating margin was 17.5% for the first quarter of 2023, compared with 16.9% for the first quarter of 2022. Excluding acquisition-related transaction and purchase accounting expenses, non-GAAP operating margin for the first quarter of 2023 was 21.1%, compared with 21.0% for the first quarter of 2022.

“We began 2023 with record first quarter sales, operating margin and non-GAAP earnings. Overall sales increased 4.7% with revenue and operating profit growing in every segment,” said Robert Mehrabian, Chairman, President and Chief Executive Officer. “Our healthcare-focused imaging businesses achieved all-time record sales and even stronger orders, while our longer-cycle marine, aerospace and government businesses, collectively, also performed well. Our shorter-cycle commercial imaging and instruments businesses remained resilient with sales in the majority of product families increasing compared with last year. Supply chain challenges improved and premiums paid for scarce electronic components declined. Finally, given record first quarter cash flow, our consolidated leverage ratio declined to 2.3x even after completing the ChartWorld acquisition.”

Review of Operations

Comparisons are with the first quarter of 2022, unless noted otherwise.

Digital Imaging

The Digital Imaging segment’s first quarter 2023 net sales were $772.5 million, compared with $750.5 million, an increase of 2.9%. Operating income was $122.2 million for the first quarter of 2023, compared with $115.7 million, an increase of 5.6%.

The first quarter of 2023 net sales increase resulted primarily from $25.0 million in incremental sales from recent acquisitions as well as greater sales of industrial and scientific cameras and x-ray detectors, partially offset by lower sales of unmanned ground systems for defense applications. The increase in operating income was primarily due to increased net sales as well as lower acquired intangible amortization expense in the first quarter of 2023. Acquired intangible amortization expense for the first quarter of 2023 was $45.8 million compared with $48.5 million.

Instrumentation

The Instrumentation segment’s first quarter 2023 net sales were $333.5 million, compared with $308.9 million, an increase of 8.0%. Operating income was $80.7 million for the first quarter of 2023, compared with $71.6 million, an increase of 12.7%.

The first quarter of 2023 net sales increase resulted from higher sales across all product lines. Sales of marine instrumentation increased $16.3 million, sales of test and measurement instrumentation increased $4.4 million, and sales of environmental instrumentation increased $3.9 million, respectively. The increase in operating income primarily reflected the impact of higher sales.

Aerospace and Defense Electronics

The Aerospace and Defense Electronics segment’s first quarter 2023 net sales were $173.2 million, compared with $166.2 million, an increase of 4.2%. Operating income was $47.0 million for the first quarter of 2023, compared with $42.9 million, an increase of 9.6%.

The first quarter of 2023 net sales reflected higher sales of $4.0 million for defense electronics and $3.0 million for aerospace electronics. The increase in operating income primarily reflected the impact of higher sales and improved product margins.

Engineered Systems

The Engineered Systems segment’s first quarter 2023 net sales were $104.1 million, compared with $95.4 million, an increase of 9.1%. Operating income was $10.0 million for the first quarter of 2023, compared with $9.4 million, an increase of 6.4%. The first quarter 2023 net sales reflected higher sales of $4.8 million for engineered products and $3.9 million for energy systems. The increase in operating income primarily reflected the impact of higher sales.

Additional Financial Information

Cash Flow

Cash provided by operating activities was $203.0 million for the first quarter of 2023 compared with cash used in operating activities of $216.7 million. The first quarter of 2023 reflected higher accounts receivable collections compared with the first quarter of 2022, and the first quarter of 2022 included a $296.4 million payment to the Swedish Tax Authority related to a disputed pre-acquisition 2018 tax reassessment issued to a FLIR subsidiary. Depreciation and amortization expense for the first quarter of 2023 was $82.1 million compared with $86.9 million. Stock-based compensation expense for the first quarter of 2023 was $7.9 million compared with $9.0 million.

Capital expenditures for the first quarter of 2023 were $24.4 million compared with $21.0 million. Teledyne received $10.2 million from the exercise of stock options in the first quarter of 2023 compared with $12.7 million.

As of April 2, 2023, net debt was $3,155.2 million which is calculated as total debt of $3,820.4 million, net of cash and cash equivalents of $665.2 million. As of January 1, 2023, net debt was $3,282.5 million and included total debt of $3,920.6 million, net of cash and cash equivalents of $638.1 million. During the first quarter of 2023, the Company repaid $100.0 million of amounts outstanding on its credit facility. As of April 2, 2023, $1,103.9 million was available under the $1.15 billion credit facility, after reductions of $25.0 million in outstanding borrowings and $21.1 million in outstanding letters of credit. Subsequent to the end of the first quarter of 2023, the Company repaid $300.0 million of debt that matured in April 2023.