TELEDYNE TECHNOLOGIES REPORTS
FIRST QUARTER RESULTS
THOUSAND OAKS, Calif. - April 23, 2025 - Teledyne Technologies Incorporated (NYSE:TDY)
•Record first quarter net sales of $1,449.9 million, an increase of 7.4% compared with last year
•First quarter GAAP diluted earnings per share of $3.99 and record first quarter non-GAAP diluted earnings per share of $4.95
•Record first quarter GAAP operating margin of 17.9% and record first quarter non-GAAP operating margin of 22.0%
•First quarter cash from operations of $242.6 million and free cash flow of $224.6 million
•Full year 2025 GAAP diluted earnings per share outlook of $17.35 to $17.83, and maintaining full year 2025 non-GAAP earnings per share outlook of $21.10 to $21.50
•First quarter capital deployment of $757.6 million for the acquisitions of Micropac and Qioptiq
•Quarter-end consolidated leverage ratio of 1.8x
Teledyne today reported first quarter 2025 net sales of $1,449.9 million compared with net sales of $1,350.1 million for the first quarter of 2024, an increase of 7.4%. The first quarter of 2025 net sales included $55.6 million in incremental sales from current and prior year acquisitions. Net income attributable to Teledyne was $188.6 million ($3.99 diluted earnings per share) for the first quarter of 2025 compared with $178.5 million ($3.72 diluted earnings per share) for the first quarter of 2024, an increase of 5.7%. The first quarter of 2025 included $52.0 million of pretax acquired intangible asset amortization expense, $6.8 million of pretax transaction and integration costs, and $0.6 million of pretax inventory step-up expense. Excluding those items, non-GAAP net income attributable to Teledyne for the first quarter of 2025 was $234.0 million ($4.95 diluted earnings per share). The first quarter of 2024 included $49.4 million of pretax acquired intangible asset amortization expense, $2.2 million of pretax transaction and integration costs, and $0.3 million of FLIR acquisition-related discrete income tax expense. Excluding those items, non-GAAP net income attributable to Teledyne for the first quarter of 2024 was $218.3 million ($4.55 diluted earnings per share). Operating margin was 17.9% for the first quarter of 2025 compared with 17.4% for the first quarter of 2024. Excluding the items discussed above, non-GAAP operating margin for the first quarter of 2025 was 22.0%, compared with 21.2% for the first quarter of 2024.
"We achieved record first quarter sales, non-GAAP operating margin, and adjusted earnings per share," said Robert Mehrabian, Executive Chairman. "First quarter sales reflected organic growth in every segment, coupled with the contribution from recent acquisitions. In addition, quarter-end backlog was an all-time record, as orders exceeded sales for the sixth consecutive quarter. We continue to execute our strategy, which has delivered long-term results regardless of economic and political uncertainty. That is, maintain a balanced and resilient mix of commercial and government businesses across a broad range of geographies and markets, continue to improve margins in existing businesses, and acquire and integrate complementary companies. For example, Qioptiq, acquired on January 31, is off to a great start, and we expect Qioptiq to contribute to our 2025 non-GAAP earnings. Nevertheless, we are choosing to maintain our prior earnings outlook given the current very unpredictable environment."
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Review of Operations
Comparisons are with the first quarter of 2024, unless noted otherwise.
Digital Imaging
The Digital Imaging segment's first quarter 2025 net sales were $757.0 million compared with $740.8 million, an increase of 2.2%. Operating income was $122.3 million for the first quarter of 2025 compared with $113.8 million, an increase of 7.5%. The first quarter of 2024 included $2.2 million of pretax transaction and integration costs, and there were no comparable amounts in the first quarter of 2025. Acquired intangible amortization expense for the first quarter of 2025 was $45.4 million compared with $45.8 million. Excluding those items, non-GAAP operating income for the first quarter of 2025 was $167.7 million compared with $161.8 million, an increase of 3.6%.
First quarter of 2025 net sales increased primarily due to higher sales of commercial infrared imaging components as well as surveillance systems, partially offset by lower sales of X-ray products. The first quarter of 2025 included $8.9 million of incremental sales from a recent acquisition. The increase in operating income was primarily due to the increase in net sales as well as lower transaction and integration costs.
Instrumentation
The Instrumentation segment's first quarter 2025 net sales were $343.3 million, compared with $330.4 million, an increase of 3.9%. Operating income was $92.7 million for the first quarter of 2025, compared with $86.0 million, an increase of 7.8%. Acquired intangible amortization expense for the first quarter of 2025 was $3.2 million compared with $3.4 million. Excluding that item, non-GAAP operating income for the first quarter of 2025 was $95.9 million compared with $89.4 million, an increase of 7.3%.
First quarter of 2025 net sales increase resulted from a $14.0 million increase in sales of marine instrumentation primarily due to stronger offshore energy and defense markets, a $1.1 million increase in sales of electronic test and measurement instrumentation, partially offset by a $2.2 million decrease in sales of environmental instrumentation. The first quarter of 2025 included $4.4 million of incremental marine instrumentation sales from recent acquisitions. The increase in operating income primarily reflected the impact of higher marine instrumentation sales as well as favorable marine instrumentation product mix and improved marine instrumentation margins.
Aerospace and Defense Electronics
The Aerospace and Defense Electronics segment's first quarter 2025 net sales were $242.5 million, compared with $185.7 million, an increase of 30.6%. Operating income was $55.7 million for the first quarter of 2025, compared with $51.9 million, an increase of 7.3%. The first quarter of 2025 included $3.2 million of pretax transaction and integration costs, with no comparable amounts in the first quarter of 2024. Acquired intangible amortization expense for the first quarter of 2025 was $3.4 million compared with $0.2 million. Inventory step-up expense for the first quarter of 2025 was $0.6 million, with no comparable amounts in the first quarter of 2024. Excluding those items, non-GAAP operating income for the first quarter of 2025 was $62.9 million compared with $52.1 million, an increase of 20.7%.
First quarter of 2025 net sales reflected higher sales of $57.1 million for defense electronics, partially offset by lower sales of $0.3 million for aerospace electronics. The first quarter of 2025 included $42.3 million of incremental defense electronics sales from recent acquisitions. The increase in operating income primarily reflected the impact of higher sales and favorable product mix, partially offset by higher transaction and integration costs as well as higher acquired intangible amortization expense.
Engineered Systems
The Engineered Systems segment's first quarter 2025 net sales were $107.1 million compared with $93.2 million, an increase of 14.9%. Operating income was $10.8 million for the first quarter of 2025, compared with $2.7 million, an increase of 300.0%.
First quarter of 2025 net sales reflected higher sales of $14.2 million for engineered products, partially offset by lower sales of $0.3 million for energy systems. The higher sales of engineered products primarily reflected increased sales of electronic manufacturing services products. The increase in operating income was primarily driven by unfavorable estimate changes in the first quarter of 2024 related to electronic manufacturing services
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contracts which did not recur in 2025, lower selling expense as well as favorable program mix in the first quarter of 2025.
Additional Financial Information
Cash Flow
Cash provided by operating activities was $242.6 million for the first quarter of 2025 compared with $291.0 million, with the decrease driven primarily by cash outflows on foreign exchange contracts in the first quarter of 2025 as compared to cash inflows on foreign exchange contracts in the first quarter of 2024 as well as lower customer advances received in the first quarter of 2025. Depreciation and amortization expense for the first quarter of 2025 was $80.7 million compared with $78.0 million. Stock-based compensation expense for the first quarter of 2025 was $8.9 million compared with $12.0 million.
Capital expenditures for the first quarter of 2025 were $18.0 million compared with $15.9 million. Teledyne received $29.5 million from the exercise of stock options in the first quarter of 2025 compared with $9.1 million.
In the first quarter of 2025, Teledyne completed two acquisitions for aggregate consideration of $757.6 million. The acquisitions were financed from cash on hand as well as borrowings from Teledyne's credit facility.
As of March 30, 2025, net debt was $2,503.3 million, which is calculated as total debt of $2,964.8 million, net of cash and cash equivalents of $461.5 million. As of December 29, 2024, net debt was $1,999.2 million, representing total debt of $2,649.0 million, net of cash and cash equivalents of $649.8 million.
As of March 30, 2025, $855.5 million was available under the $1.20 billion credit facility after reductions of $315.0 million in outstanding borrowings and $29.5 million in outstanding letters of credit.
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First Quarter
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Free Cash Flow
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2025
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2024
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Cash provided by operating activities
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$
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242.6
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$
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291.0
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Capital expenditures for property, plant and equipment
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(18.0)
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(15.9)
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Free cash flow
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$
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224.6
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$
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275.1
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Income Taxes
The effective tax rate for the first quarter of 2025 was 21.0% compared with 20.6%. The first quarter of 2025 included net discrete income tax benefits of $3.7 million compared with $4.4 million. Excluding net discrete income tax items in both periods, the effective tax rate would have been 22.5% for both the first quarter of 2025 and 2024.
Other
Corporate expense was $22.2 million for the first quarter of 2025 compared with $20.1 million, and the first quarter of 2025 included $3.6 million of pretax transaction and integration costs. Non-service retirement benefit income was $2.8 million for the first quarter of 2025 compared with $2.7 million. Interest expense, net of interest income, was $17.3 million for the first quarter of 2025 compared with $12.7 million, with the increase due to increased outstanding borrowings compared to the first quarter of 2024. Other income (expense), net, primarily consisted of foreign currency exchange losses in the first quarter of 2025 compared with foreign currency exchange gains in the first quarter of 2024.
Outlook
Based on its current outlook, the company's management believes that second quarter 2025 GAAP diluted earnings per share will be in the range of $4.00 to $4.15, and full year 2025 GAAP diluted earnings per share will be in the range of $17.35 to $17.83. The company's management further believes that second quarter 2025 non-GAAP diluted earnings per share will be in the range of $4.95 to $5.05, and full year 2025 non-GAAP diluted earnings per share will be in the range of $21.10 to $21.50. The non-GAAP outlook excludes acquired intangible asset amortization as well as acquisition and integration costs.
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Use of Non-GAAP Financial Measures
We report our financial results in accordance with generally accepted accounting principles in the United States ("GAAP"). We supplement the reporting of our financial results determined under GAAP with certain non-GAAP financial measures. The non-GAAP financial measures provide management, financial analysts, and investors with additional useful information for evaluating the company's performance. The non-GAAP financial measures should be considered in addition to and not as substitutes for financial measures prepared in accordance with GAAP. Further details on reasons we use non-GAAP financial measures, a reconciliation of those measures to the most directly comparable GAAP measures, and other information related to those measures are included after our GAAP financial statements.