Teledyne Technologies Incorporated
CEO : Dr. Robert Mehrabian
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2023 Q2 | 5.1% YoY | 11.6% | 7.7% | 2023-07-26 |
Robert Mehrabian says,
Record Breaking Performance in Q2 2023
- All-time record quarterly sales, increasing by 5.1%
- Year-over-year increase in sales, GAAP and non-GAAP operating profit, and operating margin in every segment
- GAAP operating margin of 18% and non-GAAP operating margin of 21.4%, both second quarter records
- GAAP earnings per share of $3.87 and non-GAAP earnings per share of $4.67, both second quarter records
- Consolidated leverage ratio declined to 2.1x
Performance of Teledyne FLIR
- Significant improvement in order book and backlog
- Order-to-sales ratio of 1.18x for FLIR and 1.5x for FLIR Defense
- Large orders include Black Hornet Nano UAV for U.S. Military, additional UAVs for European customers, counter UAV systems, missile systems, and surveillance imaging systems
- Charges announced for further reduction in FLIR operating footprint and related headcount
2023 Sales and Earnings Outlook
- Reaffirming prior 2023 full year sales and non-GAAP earnings outlook
- Excluding $10 million to $12 million charges
- Total 2023 growth of approximately 5% or sales of approximately $5.73 billion
- Third quarter sales estimated at roughly $1.4 billion
- Non-GAAP earnings of $19.10 at the midpoint of guidance
Segment Performance
- Digital Imaging segment: 2.3% increase in sales, higher sales of X-ray products, commercial infrared imaging components and solutions, and industrial scientific cameras
- Instrumentation segment: 5.1% increase in sales, growth in marine instruments, electronic test and measurement systems, and flat sales in environmental instruments
- Aerospace and Defense Electronics segment: 10.2% increase in sales, driven by growth in Defense Electronics and Commercial Aerospace products
- Engineering Systems segment: 18.5% increase in revenue, with operating profit increasing by 33.7%
Sue Main says,
Cash Flow and Capital Expenditures
- Cash flow from operating activities was $190.5 million in Q2 2023.
- Free cash flow was $163.2 million in Q2 2023, compared to $176.1 million in 2022.
- Capital expenditures were $27.3 million in Q2 2023, compared to $20.8 million in 2022.
Net Debt and Stock-based Compensation Expense
- The company ended Q2 2023 with approximately $2.99 billion of net debt.
- Stock-based compensation expense was $8.4 million in Q2 2023, compared to $6.4 million in 2022.
Outlook for Q3 2023
- Management expects GAAP earnings per share in the range of $3.76 to $3.90.
- Non-GAAP earnings per share are expected to be in the range of $4.70 to $4.80.
Outlook for Full Year 2023
- The company’s GAAP earnings per share outlook for the full year 2023 is $15.60 to $15.88.
- Non-GAAP earnings per share outlook is maintained at $19 to $19.20.
- The full year 2023 estimated tax rate, excluding discrete items, is expected to be 22.3%.
Q & A sessions,
Impact on Digital Imaging Segment
- Organic growth declined by 1.5% year-over-year, mainly due to government programs in digital imaging, particularly in FLIR.
- Successful orders for products in Europe and the US stabilized the business.
- Expansion in healthcare and medical sectors offset the decline in certain parts of digital imaging.
Margin Outlook
- Second quarter Digital Imaging margin increased by 28 basis points year-over-year.
- Full-year margin is expected to be relatively flat, possibly down 10-15 basis points.
- Aerospace and Defense segment projected to have 80 basis points expansion in margin for the year.
Impact on Healthcare Business
- Significant expansion in the healthcare sector, particularly in X-ray products and components.
- Some slowdown observed in China, but less than 10% of the portfolio is sold to China.
- Balance portfolio helps mitigate any potential negative impact from China’s contraction.
Debt Repayment and Acquisition Strategy
- Net debt-to-EBITDA ratio currently at 2.1%, with $60 million remaining in variable debt.
- Interest payments expected to be 2.1% in future years.
- Bullish on acquisitions, with potential for larger acquisitions in the general instrumentation area.
Q2 2023 Earnings Performance
- All-time record quarterly sales, with overall sales increasing by 5.1%.
- GAAP and non-GAAP operating margins increased year-over-year in every segment.
- GAAP operating margin of 18% and non-GAAP operating margin of 21.4%.
- GAAP earnings per share of $3.87 and non-GAAP earnings of $4.67.
- Continued debt repayment, leading to a decline in consolidated leverage ratio to 2.1x.
No bad stock 