THOUSAND OAKS, Calif. — (BUSINESS WIRE) — July 24, 2024 — Teledyne Technologies Incorporated (NYSE: TDY):

• Orders exceeded sales for the third consecutive quarter
• Second quarter sales of $1,374.1 million
• Second quarter GAAP operating margin of 18.0% and second quarter non-GAAP operating margin of 21.6%
• GAAP diluted earnings per share of $3.77 and second quarter non-GAAP diluted earnings per share of $4.58
• All-time record cash from operations of $318.7 million and free cash flow of $301.0 million
• Full year 2024 GAAP diluted earnings per share outlook of $15.87 to $16.13 and affirming full year 2024 non-GAAP earnings per share outlook of $19.25 to $19.45
• Debt maturity payment of $450 million
• Completed the acquisitions of Valeport and Adimec for aggregate consideration of $123.6 million
• Capital deployment through July 2024 includes estimated stock repurchases of approximately $278 million
• Quarter-end Consolidated Leverage Ratio of 1.7x
• Stock repurchases expected to continue under the current $1.25 billion authorization

Teledyne today reported second quarter 2024 net sales of $1,374.1 million, compared with net sales of $1,424.7 million for the second quarter of 2023, a decrease of 3.6%. Net income attributable to Teledyne was $180.2 million ($3.77 diluted earnings per share) for the second quarter of 2024, compared with $185.3 million ($3.87 diluted earnings per share) for the second quarter of 2023, a decrease of 2.8%. The second quarter of 2024 included $49.1 million of pretax acquired intangible asset amortization expense, $1.0 million of pretax FLIR integration costs and $0.2 million of FLIR acquisition-related discrete income tax expense. Excluding these items, non-GAAP net income attributable to Teledyne for the second quarter of 2024 was $218.7 million ($4.58 diluted earnings per share). The second quarter of 2023 included $49.3 million of pretax acquired intangible asset amortization expense and $0.4 million of FLIR acquisition-related discrete income tax expense. Excluding these items, non-GAAP net income attributable to Teledyne for the second quarter of 2023 was $223.7 million ($4.67 diluted earnings per share). Operating margin was 18.0% for the both the second quarter of 2024 and the second quarter of 2023. Excluding the non-GAAP items discussed above, non-GAAP operating margin for the second quarter of 2024 was 21.6%, compared with 21.4% for the second quarter of 2023.

"In the second quarter, Teledyne achieved all-time record free cash flow, allowing us to deploy approximately $852 million on debt repayment, acquisitions and stock repurchases through July,” said Robert Mehrabian, Executive Chairman. “Our earnings exceeded expectations, orders were greater than sales for the third consecutive quarter, and we ended the period with record backlog. Therefore, we are reasonably confident that quarterly sales will again increase sequentially, and we will return to year-over-year growth in the second half of 2024."

Review of Operations

Comparisons are with the second quarter of 2023, unless noted otherwise.

Digital Imaging

The Digital Imaging segment’s second quarter 2024 net sales were $739.4 million, compared with $793.3 million, a decrease of 6.8%. Operating income was $113.5 million for the second quarter of 2024, compared with $124.6 million, a decrease of 8.9%. The second quarter of 2024 included $1.0 million of pretax FLIR integration costs, and there were no comparable costs in the second quarter of 2023. Acquired intangible amortization expense for the second quarter of 2024 was $45.4 million compared with $45.6 million. Excluding these items, non-GAAP operating income for the second quarter of 2024 was $159.9 million, compared with $170.2 million, a decrease of 6.1%.

The second quarter of 2024 net sales decreased primarily due to lower sales of industrial automation imaging systems, X-ray products and commercial infrared imaging systems, partially offset by higher sales of infrared detectors and surveillance systems. The decrease in operating income was primarily due to lower sales and unfavorable product mix, including less industrial automation imaging systems sales.

Instrumentation

The Instrumentation segment’s second quarter 2024 net sales were $333.5 million, compared with $328.4 million, an increase of 1.6%. Operating income was $87.2 million for the second quarter of 2024, compared with $81.4 million, an increase of 7.1%.

The second quarter of 2024 net sales increase resulted from a $20.4 million increase in sales of marine instrumentation primarily due to stronger offshore energy and defense markets, partially offset by a $13.5 million decrease in sales of electronic test and measurement instrumentation as well as a $1.8 million decrease in sales of environmental instrumentation. The increase in operating income primarily reflected the impact of higher marine instrumentation sales as well as favorable marine instrumentation product mix.

Aerospace and Defense Electronics

The Aerospace and Defense Electronics segment’s second quarter 2024 net sales were $194.4 million, compared with $186.0 million, an increase of 4.5%. Operating income was $57.1 million for the second quarter of 2024, compared with $53.2 million, an increase of 7.3%.

The second quarter of 2024 net sales reflected higher sales of $4.0 million for aerospace electronics and $4.4 million for defense electronics. The increase in operating income primarily reflected the impact of higher sales and improved product margins.

Engineered Systems

The Engineered Systems segment’s second quarter 2024 net sales were $106.8 million, compared with $117.0 million, a decrease of 8.7%. Operating income was $7.5 million for the second quarter of 2024, compared with $11.5 million, a decrease of 34.8%.

The second quarter of 2024 net sales reflected lower sales of $8.9 million for engineered products and lower sales of $1.3 million for energy systems. The lower sales for engineered products primarily reflected decreased sales from missile defense and maritime programs. The decrease in operating income was primarily driven by lower sales and unfavorable program mix.

Additional Financial Information

Cash Flow

Cash provided by operating activities was $318.7 million for the second quarter of 2024 compared with $190.5 million, with the increase driven by stronger working capital conversion in the second quarter of 2024. Depreciation and amortization expense for the second quarter of 2024 was $77.8 million compared with $80.0 million. Stock-based compensation expense for the second quarter of 2024 was $9.3 million compared with $8.4 million.

Capital expenditures for the second quarter of 2024 were $17.7 million compared with $27.3 million. Teledyne received $2.4 million from the exercise of stock options in the second quarter of 2024 compared with $4.8 million. During the second quarter of 2024, the Company completed the acquisitions of Valeport and Adimec for aggregate consideration of $123.6 million.

During the second quarter of 2024, the Company repurchased approximately 0.5 million shares for $193.8 million.

As of June 30, 2024, net debt was $2,354.2 million which is calculated as total debt of $2,797.4 million, net of cash and cash equivalents of $443.2 million. As of December 31, 2023, net debt was $2,596.6 million representing total debt of $3,244.9 million, net of cash and cash equivalents of $648.3 million. During the second quarter of 2024, the Company made a $450 million debt maturity payment.

During the second quarter of 2024, the Company amended and restated its credit facility which extended the maturity date to June 2029 as well as increased the available borrowing capacity to $1.20 billion. As of June 30, 2024, $1,177.7 million was available under the $1.20 billion credit facility, after reductions of $22.3 million in outstanding letters of credit.