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

• Record quarterly sales of $1,424.7 million, an increase of 5.1% compared with last year
• Record second quarter GAAP diluted earnings per share of $3.87
• Record second quarter non-GAAP diluted earnings per share of $4.67
• Record second quarter GAAP operating margin of 18.0%
• Second quarter non-GAAP operating margin of 21.4%
• Full year 2023 GAAP diluted earnings outlook of $15.60 to $15.88 per share
• Reiterating full year 2023 non-GAAP earnings outlook of $19.00 to $19.20 per share, excluding further FLIR-related pretax integration costs of $10.0 million to $12.0 million in the second half of 2023
• Reduced gross debt $620 million year-to-date through July 26

Teledyne today reported second quarter 2023 net sales of $1,424.7 million, compared with net sales of $1,355.8 million for the second quarter of 2022, an increase of 5.1%. Net income attributable to Teledyne was $185.3 million ($3.87 diluted earnings per share) for the second quarter of 2023, compared with $171.3 million ($3.59 diluted earnings per share) for the second quarter of 2022, an increase of 8.2%. The second quarter of 2023 included $49.3 million of pretax acquired intangible asset amortization expense as well as $0.4 million of 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). The second quarter of 2022 included $51.3 million of pretax acquired intangible asset amortization expense as well as $0.6 million of acquisition related discrete income tax expense. Excluding these items, non-GAAP net income attributable to Teledyne for the second quarter of 2022 was $211.3 million ($4.43 diluted earnings per share). Operating margin was 18.0% for the second quarter of 2023, compared with 16.9% for the second quarter of 2022. Excluding pretax acquired intangible asset amortization expense, non-GAAP operating margin for the second quarter of 2023 was 21.4%, compared with 20.7% for the second quarter of 2022.

“In the second quarter, we achieved all-time record quarterly sales. Furthermore, sales as well as GAAP and non-GAAP operating margins increased year-over-year in every segment,” said Robert Mehrabian, Chairman, President and Chief Executive Officer. “Both orders and quarter-end backlog were nearly records driven by our Digital Imaging segment especially Teledyne FLIR. Nevertheless, we have begun further integration and facility consolidation activities, as we accelerate the relocation of select Teledyne FLIR operations to existing sites. Including continued debt repayment through July, our consolidated leverage ratio declined to 2.1x, and we continue to seek disciplined capital deployment including acquisitions.”

Review of Operations

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

Digital Imaging

The Digital Imaging segment’s second quarter 2023 net sales were $793.3 million, compared with $775.8 million, an increase of 2.3%. Operating income was $124.6 million for the second quarter of 2023, compared with $117.9 million, an increase of 5.7%.

The second quarter of 2023 net sales increase resulted primarily from $28.8 million in incremental sales from recent acquisitions as well as greater sales of x-ray products, commercial infrared imaging components and solutions, and industrial and scientific cameras, partially offset by lower sales of unmanned ground systems for defense applications. The increase in operating income was primarily due to increased net sales. Acquired intangible amortization expense for the second quarter of 2023 was $45.6 million compared with $46.4 million.

Instrumentation

The Instrumentation segment’s second quarter 2023 net sales were $328.4 million, compared with $312.5 million, an increase of 5.1%. Operating income was $81.4 million for the second quarter of 2023, compared with $73.6 million, an increase of 10.6%.

The second quarter of 2023 net sales increase resulted from higher sales across the marine instrumentation and test and measurement instrumentation product lines. Sales of marine instrumentation increased $12.1 million and sales of test and measurement instrumentation increased $4.0 million. Sales of environmental instrumentation decreased $0.2 million. The increase in operating income primarily reflected the impact of higher sales and favorable product mix.

Aerospace and Defense Electronics

The Aerospace and Defense Electronics segment’s second quarter 2023 net sales were $186.0 million, compared with $168.8 million, an increase of 10.2%. Operating income was $53.2 million for the second quarter of 2023, compared with $44.1 million, an increase of 20.6%.

The second quarter of 2023 net sales reflected higher sales of $9.6 million for defense electronics and $7.6 million for aerospace electronics. The increase in operating income primarily reflected the impact of higher sales and improved margins across most defense electronics product categories.

Engineered Systems

The Engineered Systems segment’s second quarter 2023 net sales were $117.0 million, compared with $98.7 million, an increase of 18.5%. Operating income was $11.5 million for the second quarter of 2023, compared with $8.6 million, an increase of 33.7%.

The second quarter 2023 net sales reflected higher sales of $14.8 million for engineered products and $3.5 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 $190.5 million for the second quarter of 2023 compared with $196.9 million. Depreciation and amortization expense for the second quarter of 2023 was $80.0 million compared with $82.7 million. Stock-based compensation expense for the second quarter of 2023 was $8.4 million compared with $6.4 million.

Capital expenditures for the second quarter of 2023 were $27.3 million compared with $20.8 million. Teledyne received $4.8 million from the exercise of stock options in both the second quarter of 2023 and 2022.

As of July 2, 2023, net debt was $2,989.1 million which is calculated as total debt of $3,353.3 million, net of cash and cash equivalents of $364.2 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. Teledyne repaid $570.0 million of debt during the first half of 2023, including paying $300.0 million of debt that matured in April 2023 and making $260.0 million of floating rate debt payments which reduced its term loan due May 2026 by $135.0 million and reduced its outstanding credit facility balance by $125.0 million. In addition, during the second quarter of 2023, Teledyne repurchased and retired $10.0 million of our Fixed Rate Senior Notes due April 2031, recording a $1.6 million non-cash gain on the extinguishment of this debt. Subsequent to the end of the second quarter of 2023, the Company repaid $50.0 million outstanding on its term loan due May 2026.

As of July 2, 2023, $1,131.1 million was available under the $1.15 billion credit facility, after reductions of $18.9 million in outstanding letters of credit.