Teledyne Technologies Reports Third Quarter Results

THOUSAND OAKS, Calif. — (BUSINESS WIRE) — October 27, 2021 — Teledyne Technologies Incorporated (NYSE: TDY)

Record sales of $1,311.9 million, an increase of 75.2% compared with last year
Third quarter GAAP diluted earnings per share of $2.81, an increase of 13.3% compared with last year
Third quarter non-GAAP diluted earnings per share of $4.34, excluding acquisition-related pretax transaction and purchase accounting expenses of $92.3 million and related tax matters ($1.53 per share)
Third quarter GAAP operating margin of 14.5% and non-GAAP operating margin of 21.5%
Record third quarter cash flow from operations
Increasing full year 2021 GAAP earnings outlook to $9.13 to $9.29 per share, compared with the prior outlook of $8.05 to $8.45 per share and full year 2021 non-GAAP earnings outlook to $16.35 to $16.45 per share, compared with $15.25 to $15.50 per share, which excludes acquisition-related transaction and purchase accounting expenses and related tax matters

Teledyne today reported third quarter 2021 net sales of $1,311.9 million, compared with net sales of $749.0 million for the third quarter of 2020, an increase of 75.2%. Net income was $134.1 million ($2.81 diluted earnings per share) for the third quarter of 2021, compared with $93.9 million ($2.48 diluted earnings per share) for the third quarter of 2020, an increase of 42.8%. The third quarter of 2021 net sales included $473.6 million in incremental net sales from the acquisition of FLIR Systems, Inc. (“FLIR”). In connection with the FLIR acquisition, in the third quarter of 2021, Teledyne incurred pretax expenses of $82.6 million, which included $45.6 million in acquired intangible asset amortization expense, $35.2 million in acquired inventory step-up expense and $1.8 million of transaction and integration-related costs. The third quarter of 2021 also included $9.7 million of acquired intangible asset amortization expense for transactions completed in prior periods. Excluding these charges and related tax matters, non-GAAP net income for the third quarter of 2021 was $207.2 million ($4.34 per share). The third quarter of 2020 included pretax charges of $13.8 million which included $9.9 million in acquired intangible asset amortization expense and $3.9 million in severance, facility consolidation and other costs. Excluding acquired intangible asset amortization expense, non-GAAP net income for the third quarter of 2020 was $101.5 million ($2.68 per share). Operating margin was 14.5% for the third quarter of 2021, compared with 16.4% for the third quarter of 2020. Excluding acquisition-related transaction and purchase accounting expenses, non-GAAP operating margin for the third quarter of 2021 was 21.5%, compared with 17.7% for the third quarter of 2020. The third quarter of 2021 reflected net discrete income tax benefits of $6.3 million compared with net discrete income tax benefits of $1.2 million for the third quarter of 2020.

“Our record sales in the third quarter included organic growth just under 12 percent and operating margin increased 380 basis points excluding acquisition-related costs,” said Robert Mehrabian, Chairman, President and Chief Executive Officer. “Cash flow was a third quarter record, allowing repayment of $300.0 million of debt, while our leverage ratio declined to 3.3x from 3.7x at the end of the second quarter. Sales increased in every major business category but were especially strong in our commercial imaging and electronic test and measurement instrumentation businesses. Our government businesses continued to grow, and we are beginning to see a recovery in some of our longer-cycle commercial markets such as aerospace and energy. We are also very pleased with the integration of Teledyne FLIR, as well as its performance in the first full quarter as part of Teledyne. Finally, while Teledyne is not immune to supply chain challenges and the current operating environment, we have been successfully navigating and managing these issues.”

Review of Operations

Comparisons are with the third quarter of 2020, unless noted otherwise.

Digital Imaging

The Digital Imaging segment’s third quarter 2021 net sales were $760.6 million, compared with $239.7 million, an increase of 217.3%. Operating income was $94.9 million for the third quarter of 2021, compared with $45.5 million, an increase of 108.6%.

The third quarter 2021 net sales increase included $473.6 million of incremental net sales from the FLIR acquisition as well as organic sales growth from industrial and scientific sensors and cameras, x-ray products and micro-electro-mechanical systems (“MEMS”), partially offset by lower sales for geospatial imaging systems. The increase in operating income in the third quarter of 2021 reflected the contribution from the FLIR acquisition, partially offset by $82.3 million of FLIR acquisition-related transaction and purchase accounting expenses, which included $45.6 million in acquired intangible asset amortization expense, $35.2 million in inventory step-up expense and $1.5 million of integration-related costs. The increase in operating income also reflected the impact of organic sales growth.

Instrumentation

The Instrumentation segment’s third quarter 2021 net sales were $287.1 million, compared with $263.5 million, an increase of 9.0%. Operating income was $63.0 million for the third quarter of 2021, compared with $50.7 million, an increase of 24.3%.

The third quarter 2021 net sales increase resulted from higher sales of test and measurement instrumentation, environmental instrumentation and marine instrumentation. Sales of test and measurement instrumentation increased $12.8 million, environmental instrumentation increased $7.6 million and marine instrumentation increased $3.2 million. The increase in operating income reflected the impact of higher sales and improved margins across most product categories resulting from ongoing margin improvement initiatives.

Aerospace and Defense Electronics

The Aerospace and Defense Electronics segment’s third quarter 2021 net sales were $161.8 million, compared with $144.8 million, an increase of 11.7%. Operating income was $35.9 million for the third quarter of 2021, compared with $26.7 million, an increase of 34.5%.

The third quarter 2021 net sales reflected $9.9 million of higher sales for defense and space electronics as well as higher sales of $7.1 million for aerospace electronics. Operating income in the third quarter of 2021 reflected the impact of higher sales and a lower cost structure due to actions taken in 2020 and lower research and development costs. Research and development expense was lower by $2.8 million in the third quarter of 2021, and primarily reflected lower spending for aerospace electronics.

Engineered Systems

The Engineered Systems segment’s third quarter 2021 net sales were $102.4 million, compared with $101.0 million, an increase of 1.4%. Operating income was $11.5 million for the third quarter of 2021, compared with $12.5 million, a decrease of 8.0%.

The third quarter 2021 net sales primarily reflected higher sales of $7.8 million of engineered products, partially offset by lower sales of $6.3 million for turbine engines. The higher sales for engineered products primarily reflected increased sales from medical modeling and analysis, missile defense and marine manufacturing programs. Teledyne exited the turbine engine business in the first quarter of 2021.

Additional Financial Information

Cash Flow

Cash provided by operating activities was $192.8 million for the third quarter of 2021, compared with $150.3 million. The higher cash flow from operating activities for the third quarter of 2021 reflected the impact of higher net income, the cash flow contribution from FLIR and lower income tax payments, partially offset by semi-annual interest payments. At October 3, 2021, net debt was $3,889.9 million and comprised of cash and cash equivalents of $551.8 million and total debt of $4,441.7 million. At January 3, 2021, net debt was $105.4 million and comprised of cash and cash equivalents of $673.1 million and total debt of $778.5 million. The higher debt balance at October 3, 2021, included the debt incurred to fund the cash portion of the FLIR acquisition. In the third quarter of 2021, Teledyne repaid $300.0 million against the $1.0 billion Term Loan Credit Agreement. At October 3, 2021, approximately $751.1 million was available under the $1,150 million credit facility, after reductions of $125.0 million in borrowings and $273.9 million in outstanding letters of credit. The outstanding letters of credit include a $253.6 million letter of credit to the Swedish Tax Authority, related to a disputed pre-acquisition 2018 tax reassessment issued to a FLIR subsidiary in Sweden. The Company received $5.5 million from the exercise of stock options in the third quarter of 2021 compared with $1.3 million. Capital expenditures for the third quarter of 2021 were $29.2 million compared with $15.2 million. Depreciation and amortization expense for the third quarter of 2021 was $90.2 million, which includes acquired intangible asset amortization expense of $45.6 million related to FLIR, compared with $29.2 million. Non-cash inventory step-up expense related to FLIR was $35.2 million for the third quarter of 2021.

1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 Next Page »