Teledyne Technologies Reports First Quarter Results
Teledyne Technologies (NYSE: TDY) announced record first-quarter sales of $1,383.3 million, up 4.7% year-over-year. GAAP diluted earnings per share (EPS) fell 15.9% to $3.73, while non-GAAP EPS rose to $4.53. Operating margins improved slightly, with GAAP at 17.5% and non-GAAP at 21.1%. Cash flow from operations also set a record at $203 million. The company completed its acquisition of ChartWorld International and reduced gross debt by $400 million. Full-year 2023 GAAP diluted EPS guidance is projected between $15.80 and $16.05, while non-GAAP guidance remains stable at $19.00 to $19.20.
- Record first quarter sales of $1,383.3 million, a 4.7% increase.
- Record cash flow from operations of $203.0 million.
- Non-GAAP EPS increased to $4.53 from $4.27 year-over-year.
- Completed the acquisition of ChartWorld International.
- GAAP EPS decreased by 15.9% to $3.73 from $4.46 year-over-year.
- Operating income declines in defense applications within Digital Imaging.
-
Record first quarter sales of
, an increase of$1,383.3 million 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 of21.1% -
Record first quarter cash from operations of
$203.0 million -
Completed the acquisition of
ChartWorld International -
Full year 2023 GAAP diluted earnings outlook of
to$15.80 per share and reiterating full year 2023 non-GAAP earnings outlook of$16.05 to$19.00 per share$19.20 -
Reduced gross debt by
, including a$400 million debt maturity payment after quarter-end on$300 million April 3, 2023
Teledyne today reported first quarter 2023 net sales of
“We began 2023 with record first quarter sales, operating margin and non-GAAP earnings. Overall sales increased
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
The first quarter of 2023 net sales increase resulted primarily from
Instrumentation
The Instrumentation segment’s first quarter 2023 net sales were
The first quarter of 2023 net sales increase resulted from higher sales across all product lines. Sales of marine instrumentation increased
Aerospace and Defense Electronics
The Aerospace and Defense Electronics segment’s first quarter 2023 net sales were
The first quarter of 2023 net sales reflected higher sales of
Engineered Systems
The Engineered Systems segment’s first quarter 2023 net sales were
Additional Financial Information
Cash Flow
Cash provided by operating activities was
Capital expenditures for the first quarter of 2023 were
As of
|
|
First Quarter |
||||||
Free Cash Flow |
|
|
2023 |
|
|
|
2022 |
|
Cash provided by (used in) operating activities |
|
$ |
203.0 |
|
|
$ |
(216.7 |
) |
Capital expenditures for property, plant and equipment |
|
|
(24.4 |
) |
|
|
(21.0 |
) |
Free cash flow |
|
|
178.6 |
|
|
|
(237.7 |
) |
Payment for acquisition-related tax matter |
|
|
— |
|
|
|
296.4 |
|
Adjusted free cash flow |
|
$ |
178.6 |
|
|
$ |
58.7 |
|
Income Taxes
The effective tax rate for the first quarter of 2023 was
Other
Corporate expense was
Outlook
Based on its current outlook, the company’s management believes that second quarter 2023 GAAP diluted earnings per share will be in the range of
Use of Non-GAAP Financial Measures
We report our financial results in accordance with generally accepted accounting principles in
Forward-Looking Statements Cautionary Notice
This earnings release contains forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995, with respect to management’s beliefs about the financial condition, results of operations, acquisitions and product synergies, tax matters and businesses of Teledyne in the future. Forward-looking statements involve risks and uncertainties, are based on the current expectations of the management of Teledyne and are subject to uncertainty and changes in circumstances.
The forward-looking statements contained herein may include statements relating to stock-based compensation expense, tax rates, anticipated capital expenditures and product developments, and other strategic options. Forward-looking statements generally are accompanied by words such as “projects”, “intends”, “expects”, “anticipates”, “targets”, “estimates”, “will” and words of similar import that convey the uncertainty of future events or outcomes. All statements made in this communication that are not historical in nature should be considered forward-looking. By its nature, forward-looking information is not a guarantee of future performance or results and involves risks and uncertainties because it relates to events and depends on circumstances that will occur in the future.
Actual results could differ materially from these forward-looking statements. Many factors could change anticipated results, including ongoing challenges and uncertainties posed by the COVID pandemic for businesses and governments around the world, including production, supply, contractual and other disruptions, such as COVID related lockdowns, facility closures, furloughs and travel restrictions; changes in relevant tax and other laws; foreign currency exchange risks; rising interest rates; risks associated with indebtedness, as well as our ability to reduce indebtedness and the timing thereof; the impact of semiconductor and other supply chain shortages; higher inflation, including wage competition and higher shipping costs; labor shortages and competition for skilled personnel; the inability to develop and market new competitive products; inherent uncertainties involved in the estimates and judgments used in the preparation of financial statements and the providing of estimates of financial measures, in accordance with
While the company’s growth strategy includes possible acquisitions, we cannot provide any assurance as to when, if or on what terms any acquisitions will be made. Acquisitions, including the recent acquisition of ChartWorld, involve various inherent risks, such as, among others, our ability to integrate acquired businesses, retain customers and achieve identified financial and operating synergies. There are additional risks associated with acquiring, owning and operating businesses internationally, including those arising from
Additional factors that could cause results to differ materially from those described above can be found in Teledyne’s Annual Report on Form 10-K for the year ended
All forward-looking statements speak only as of the date they are made and are based on information available at that time. Teledyne assumes no obligation to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements were made or to reflect the occurrence of unanticipated events except as required by federal securities laws. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements.
A live webcast of Teledyne’s first quarter earnings conference call will be held at
CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE FIRST QUARTER ENDED
(Unaudited - in millions, except per share amounts) |
||||||||
|
|
First Quarter |
|
First Quarter |
||||
|
|
|
2023 |
|
|
|
2022 |
|
Net sales |
|
$ |
1,383.3 |
|
|
$ |
1,321.0 |
|
Costs and expenses: |
|
|
|
|
||||
Costs of sales |
|
|
790.7 |
|
|
|
752.6 |
|
Selling, general and administrative |
|
|
300.4 |
|
|
|
291.3 |
|
Acquired intangible asset amortization |
|
|
49.7 |
|
|
|
53.6 |
|
Total costs and expenses |
|
|
1,140.8 |
|
|
|
1,097.5 |
|
Operating income (loss) |
|
|
242.5 |
|
|
|
223.5 |
|
Interest and debt income (expense), net |
|
|
(21.0 |
) |
|
|
(22.3 |
) |
Non-service retirement benefit income (expense), net |
|
|
3.3 |
|
|
|
2.8 |
|
Other income (expense), net |
|
|
(1.1 |
) |
|
|
(1.0 |
) |
Income (loss) before income taxes |
|
|
223.7 |
|
|
|
203.0 |
|
Provision (benefit) for income taxes (a) |
|
|
44.9 |
|
|
|
(9.6 |
) |
Net income (loss) including noncontrolling interest |
|
|
178.8 |
|
|
|
212.6 |
|
Less: Net income (loss) attributable to noncontrolling interest |
|
|
0.1 |
|
|
|
— |
|
Net income (loss) attributable to Teledyne |
|
$ |
178.7 |
|
|
$ |
212.6 |
|
|
|
|
|
|
||||
Diluted earnings per share attributable to Teledyne common shareholders |
|
$ |
3.73 |
|
|
$ |
4.46 |
|
|
|
|
|
|
||||
Weighted average diluted Teledyne common shares outstanding |
|
|
47.9 |
|
|
|
47.7 |
|
(a) The first quarter of 2023 includes net discrete income tax benefits of
This financial statement was prepared in accordance with
SUMMARY OF SEGMENT NET SALES AND OPERATING INCOME FOR THE FIRST QUARTER ENDED
(Unaudited - $ in millions) |
|||||||||||
|
|
First Quarter |
|
First Quarter |
|
% Change |
|||||
|
|
|
2023 |
|
|
|
2022 |
|
|
||
Net sales: |
|
|
|
|
|
|
|||||
Digital Imaging |
|
$ |
772.5 |
|
|
$ |
750.5 |
|
|
2.9 |
% |
Instrumentation |
|
|
333.5 |
|
|
|
308.9 |
|
|
8.0 |
% |
Aerospace and Defense Electronics |
|
|
173.2 |
|
|
|
166.2 |
|
|
4.2 |
% |
Engineered Systems |
|
|
104.1 |
|
|
|
95.4 |
|
|
9.1 |
% |
Total net sales |
|
$ |
1,383.3 |
|
|
$ |
1,321.0 |
|
|
4.7 |
% |
Operating income (loss): |
|
|
|
|
|
|
|||||
Digital Imaging |
|
$ |
122.2 |
|
|
$ |
115.7 |
|
|
5.6 |
% |
Instrumentation |
|
|
80.7 |
|
|
|
71.6 |
|
|
12.7 |
% |
Aerospace and Defense Electronics |
|
|
47.0 |
|
|
|
42.9 |
|
|
9.6 |
% |
Engineered Systems |
|
|
10.0 |
|
|
|
9.4 |
|
|
6.4 |
% |
Corporate expense |
|
|
(17.4 |
) |
|
|
(16.1 |
) |
|
8.1 |
% |
Operating income (loss) |
|
|
242.5 |
|
|
|
223.5 |
|
|
8.5 |
% |
Interest and debt income (expense), net |
|
|
(21.0 |
) |
|
|
(22.3 |
) |
|
(5.8 |
)% |
Non-service retirement benefit income (expense), net |
|
|
3.3 |
|
|
|
2.8 |
|
|
17.9 |
% |
Other income (expense), net |
|
|
(1.1 |
) |
|
|
(1.0 |
) |
|
10.0 |
% |
Income (loss) before income taxes |
|
|
223.7 |
|
|
|
203.0 |
|
|
10.2 |
% |
Provision (benefit) for income taxes (a) |
|
|
44.9 |
|
|
|
(9.6 |
) |
|
* |
|
Net income (loss) including noncontrolling interest |
|
|
178.8 |
|
|
|
212.6 |
|
|
(15.9 |
)% |
Less: Net income (loss) attributable to noncontrolling interest |
|
|
0.1 |
|
|
|
— |
|
|
* |
|
Net income (loss) attributable to Teledyne |
|
$ |
178.7 |
|
|
$ |
212.6 |
|
|
(15.9 |
)% |
* not meaningful
(a) The first quarter of 2023 includes net discrete income tax benefits of
This financial statement was prepared in accordance with
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited – in millions) |
||||||||
|
|
|
|
|
||||
ASSETS |
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
665.2 |
|
$ |
638.1 |
||
Accounts receivable and unbilled receivables, net |
|
|
1,120.1 |
|
|
|
1,158.4 |
|
Inventories, net |
|
|
951.7 |
|
|
|
890.7 |
|
Prepaid expenses and other current assets |
|
|
145.4 |
|
|
|
130.7 |
|
Total current assets |
|
|
2,882.4 |
|
|
|
2,817.9 |
|
Property, plant and equipment, net |
|
|
765.3 |
|
|
|
769.8 |
|
|
|
|
10,330.9 |
|
|
|
10,313.6 |
|
Prepaid pension assets |
|
|
182.4 |
|
|
|
178.4 |
|
Other assets, net |
|
|
268.3 |
|
|
|
274.3 |
|
Total assets |
|
$ |
14,429.3 |
|
|
$ |
14,354.0 |
|
LIABILITIES AND EQUITY |
|
|
|
|
||||
Accounts payable |
|
$ |
495.0 |
|
|
$ |
505.7 |
|
Accrued liabilities |
|
|
692.9 |
|
|
|
717.6 |
|
Current portion of long-term debt |
|
|
300.1 |
|
|
|
300.1 |
|
Total current liabilities |
|
|
1,488.0 |
|
|
|
1,523.4 |
|
Long-term debt, net of current portion |
|
|
3,520.3 |
|
|
|
3,620.5 |
|
Other long-term liabilities |
|
|
1,051.6 |
|
|
|
1,037.2 |
|
Total liabilities |
|
|
6,059.9 |
|
|
|
6,181.1 |
|
Redeemable noncontrolling interest |
|
|
3.7 |
|
|
|
3.7 |
|
Total stockholders' equity |
|
|
8,365.7 |
|
|
|
8,169.2 |
|
Total liabilities and equity |
|
$ |
14,429.3 |
|
|
$ |
14,354.0 |
|
This financial statement was prepared in accordance with
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
FOR THE FIRST QUARTER ENDED (Unaudited - in millions, except per share amounts) |
|||||||||||||||||||||||
|
First Quarter 2023 |
|
First Quarter 2022 |
||||||||||||||||||||
|
Income (loss) before income taxes |
|
Net (loss) income attributable to Teledyne |
|
Diluted earnings per common share |
|
Income (loss) before income taxes |
|
Net (loss) income attributable to Teledyne |
|
Diluted earnings per common share |
||||||||||||
GAAP |
$ |
223.7 |
|
$ |
178.7 |
|
$ |
3.73 |
|
$ |
203.0 |
|
$ |
212.6 |
|
$ |
4.46 |
||||||
Adjusted for specified items: |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Acquired intangible asset amortization |
|
49.7 |
|
|
|
38.2 |
|
|
|
0.79 |
|
|
|
53.6 |
|
|
|
41.3 |
|
|
|
0.86 |
|
Acquisition-related tax matters |
|
— |
|
|
|
0.3 |
|
|
|
0.01 |
|
|
|
— |
|
|
|
(50.0 |
) |
|
|
(1.05 |
) |
Non-GAAP |
$ |
273.4 |
|
|
$ |
217.2 |
|
|
$ |
4.53 |
|
|
$ |
256.6 |
|
|
$ |
203.9 |
|
|
$ |
4.27 |
|
|
|
First Quarter 2023 |
|
First Quarter 2022 |
||||||||||
|
|
Operating income (loss) |
|
Operating margin |
|
Operating income (loss) |
|
Operating margin |
||||||
GAAP |
|
$ |
242.5 |
|
17.5 |
% |
|
$ |
223.5 |
|
16.9 |
% |
||
Adjusted for specified items: |
|
|
|
|
|
|
|
|
||||||
Acquired intangible asset amortization |
|
|
49.7 |
|
|
|
|
|
53.6 |
|
|
|
||
Non-GAAP |
|
$ |
292.2 |
|
|
21.1 |
% |
|
$ |
277.1 |
|
|
21.0 |
% |
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (Unaudited - in millions) |
|||||||||||
|
First Quarter 2023 |
||||||||||
|
GAAP Operating Income (loss) |
|
Acquired intangible asset amortization |
|
Non-GAAP Operating Income (loss) |
||||||
|
|
|
|
|
|
||||||
Digital Imaging |
$ |
122.2 |
|
|
$ |
45.8 |
|
$ |
168.0 |
|
|
Instrumentation |
|
80.7 |
|
|
|
3.7 |
|
|
|
84.4 |
|
Aerospace and Defense Electronics |
|
47.0 |
|
|
|
0.2 |
|
|
|
47.2 |
|
Engineered Systems |
|
10.0 |
|
|
|
— |
|
|
|
10.0 |
|
Corporate expense |
|
(17.4 |
) |
|
|
— |
|
|
|
(17.4 |
) |
Total |
$ |
242.5 |
|
|
$ |
49.7 |
|
|
$ |
292.2 |
|
|
First Quarter 2022 |
||||||||||
|
GAAP Operating Income (loss) |
|
Acquired intangible asset amortization |
|
Non-GAAP Operating Income (loss) |
||||||
|
|
|
|
|
|
||||||
Digital Imaging |
$ |
115.7 |
|
|
$ |
48.5 |
|
$ |
164.2 |
|
|
Instrumentation |
|
71.6 |
|
|
|
4.9 |
|
|
|
76.5 |
|
Aerospace and Defense Electronics |
|
42.9 |
|
|
|
0.2 |
|
|
|
43.1 |
|
Engineered Systems |
|
9.4 |
|
|
|
— |
|
|
|
9.4 |
|
Corporate expense |
|
(16.1 |
) |
|
|
— |
|
|
|
(16.1 |
) |
Total |
$ |
223.5 |
|
|
$ |
53.6 |
|
|
$ |
277.1 |
|
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (Unaudited - in millions) |
||||||||
|
|
|
|
|
||||
Current portion of long-term debt - GAAP |
|
$ |
300.1 |
|
|
$ |
300.1 |
|
Long-term debt - GAAP |
|
|
3,520.3 |
|
|
|
3,620.5 |
|
Total debt - non-GAAP |
|
|
3,820.4 |
|
|
|
3,920.6 |
|
Less cash and cash equivalents - GAAP |
|
|
(665.2 |
) |
|
|
(638.1 |
) |
Net debt - non-GAAP |
|
$ |
3,155.2 |
|
|
$ |
3,282.5 |
|
|
|
Second Quarter 2023 |
|
Twelve Months 2023 |
||||||||||||
|
|
Low |
|
High |
|
Low |
|
High |
||||||||
GAAP Diluted Earnings Per Common Share Outlook |
|
$ |
3.76 |
|
$ |
3.88 |
|
$ |
15.80 |
|
$ |
16.05 |
||||
Adjusted for specified item: |
|
|
|
|
|
|
|
|
||||||||
Acquired intangible asset amortization |
|
|
0.80 |
|
|
|
0.78 |
|
|
|
3.19 |
|
|
|
3.14 |
|
Acquisition-related tax matters |
|
|
— |
|
|
|
— |
|
|
|
0.01 |
|
|
|
0.01 |
|
Non-GAAP Diluted Earnings Per Common Share Outlook |
|
$ |
4.56 |
|
|
$ |
4.66 |
|
|
$ |
19.00 |
|
|
$ |
19.20 |
|
Explanation of Non-GAAP Financial Measures
We report our financial results in accordance with GAAP. However, management believes that, in order to more fully understand our short-term and long-term financial and operational trends, and to aid in comparability with our competitors, investors and financial analysts may wish to consider the impact of certain items resulting from our acquisitions which have an infrequent or non-recurring impact on operations or assist in understanding our operations pre-acquisition. Accordingly, we present non-GAAP financial measures as a supplement to the financial measures we present in accordance with GAAP. These non-GAAP financial measures provide management, investors and financial analysts with additional means to understand and evaluate the operating results and trends in our ongoing business by adjusting for certain expenses and other items. Management believes these non-GAAP financial measures also provide additional means of evaluating period-over-period operating performance. In addition, management understands that some investors and financial analysts find this information helpful in analyzing our financial and operational performance and comparing this performance to our peers and competitors. The company’s 2023 diluted earnings per common share guidance is also presented on a non-GAAP basis.
The non-GAAP financial measures are not meant to be considered superior to, or a substitute for, our financial statements prepared in accordance with GAAP. There are material limitations associated with non-GAAP financial measures because they exclude charges that have an effect on our reported results and, therefore, should not be relied upon as the sole financial measures by which to evaluate our financial results. Management compensates and believes that investors should compensate for these limitations by viewing the non-GAAP financial measures in conjunction with the GAAP financial measures. In addition, the non-GAAP financial measures included in this earnings announcement may be different from, and therefore may not be comparable to, similar measures used by other companies. The non-GAAP financial measures are also used by our management to evaluate our operating performance and benchmark our results against our historical performance and the performance of our peers.
Our non-GAAP measures are as follows:
Non-GAAP income before income taxes, net income and diluted earnings per common share
These non-GAAP measures provided a supplemental view of income before taxes, net income, and diluted earnings per common share. These non-GAAP measures exclude certain FLIR acquisition integration-related costs, acquired intangible asset amortization, the remeasurement of deferred taxes related to acquired intangible assets due to changes in tax laws, and the tax benefits or costs related to the settlement or other resolution of the FLIR tax reserves. We also adjust for any post-acquisition interest on certain income tax reserves related to FLIR. We adjust for any income tax impact related to these items to take into account the tax treatment and related tax rate and changes in tax rates that apply to each adjustment in the applicable tax jurisdiction. Generally, this results in the tax impact at the
Non-GAAP operating income and operating margin
We define non-GAAP operating margin as non-GAAP operating income divided by net sales. These non-GAAP measures exclude certain FLIR acquisition integration-related costs and acquired intangible asset amortization. We believe these measures provide investors and management with additional means to understand and evaluate the operating results of our business by adjusting for certain expenses and other items and present an alternative view of our performance compared to prior periods.
Non-GAAP total debt and net debt
We define non-GAAP total debt as the sum of current portion of long-term debt and other debt and long-term debt. We define net debt as the difference between non-GAAP total debt less cash and cash equivalents. The company believes that this supplemental non-GAAP information is useful to assist investors and management in analyzing the company’s liquidity.
Non-GAAP diluted earnings per common share outlook
These non-GAAP measures represent our earnings per common share outlook for the second quarter 2023 and total year 2023 on a fully diluted basis, excluding acquired intangible asset amortization for all acquisitions and acquisition-related tax matters.
Non-GAAP cash provided by operations and free cash flow and adjusted free cash flow
We define free cash flow as cash provided by operating activities (a measure prescribed by GAAP) less capital expenditures for property, plant and equipment. Adjusted free cash flow eliminates the impact of cash paid for a pre-acquisition 2018 tax reassessment issued to a FLIR subsidiary in
Non-GAAP line items used in previous tables
Management excludes the effect of each of the acquisition related items identified below to arrive at the applicable non-GAAP financial measure referenced in the previous tables for the reasons set forth below with respect to that item:
- FLIR transaction and integration costs – Included in our GAAP presentation of cost of sales and selling, general and administrative expenses are expenses incurred in connection with our acquisition of FLIR and primarily include legal, accounting, other professional fees as well as integration-related costs such as employee separation costs and facility lease impairments. Employee separation costs include required change-in-control payments, cash settlement of FLIR employee and director stock awards, as well as other employee severance amounts. We exclude these costs from our non-GAAP measures because we believe it does not reflect our ongoing financial performance.
- Acquired intangible asset amortization – We believe that excluding the amortization of acquired intangible assets, which primarily represents purchased technology and customer relationships, as well as purchase order and contract backlog, provides an alternative way for investors to compare our operations pre-acquisition to those post acquisition and to those of our competitors that have pursued internal growth strategies. However, we note that companies that grow internally will incur costs to develop intangible assets that will be expensed in the period incurred, which may make a direct comparison more difficult.
- Acquisition-related tax matters – Included in our tax provision is post-acquisition interest on certain income tax reserves related to FLIR, as well as the tax benefits or costs related to the settlement or other resolution of the FLIR tax reserves. We exclude these impacts from our non-GAAP measures because we believe it does not reflect our ongoing financial performance.
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