Teledyne Technologies Reports First Quarter Results

(a) The company defines free cash flow as cash provided by operating activities (a measure prescribed by generally accepted accounting principles) less capital expenditures for property, plant and equipment. The company believes that this supplemental non-GAAP information is useful to assist management and the investment community in analyzing the company’s ability to generate cash flow.

Income Taxes

The effective tax rate for the first quarter of 2020 was 18.6% compared with 18.9%. The first quarter of 2020 reflected net discrete income tax benefits of $4.2 million. This amount included $4.7 million in income tax benefit related to share-based accounting. The first quarter of 2019 reflected net discrete income tax benefits of $3.1 million. This amount included a $2.9 million income tax benefit related to share-based accounting. Excluding the net discrete income tax benefits in both periods, the effective tax rates would have been 22.8% for the first quarter of 2020 and 22.3% for the first quarter of 2019.

Other

Stock option expense was $7.4 million for the first quarter of 2020, compared with $8.9 million. Stock option expense for fiscal year 2020 is currently expected to be $25.6 million, compared with $26.1 million for fiscal year 2019. Non-service retirement benefit income was $2.5 million for the first quarter of 2020, compared with $2.2 million. Interest expense, net of interest income, decreased to $4.1 million for the first quarter of 2020 compared with $5.4 million and reflected the impact of lower average interest rates. Corporate expense was $15.4 million for the first quarter of 2020, compared with $18.1 million. The decrease in corporate expense reflected lower compensation and stock option expense, partially offset by $1.1 million of acquisition costs.

Outlook

Based on its current outlook, the company’s management believes that second quarter 2020 GAAP diluted earnings per share will be in the range of $1.90 to $2.05 and full year 2020 GAAP diluted earnings per share will be in the range of $9.30 to $10.00. The company’s annual expected tax rate for 2020 is 22.8%, before discrete tax items. In addition, we currently expect significantly less discrete tax items in 2020 compared with 2019. The estimates for second quarter and full year 2020 GAAP diluted earnings per share exclude a future potential charge related to Airbus OneWeb Satellites, LLC (AOS). At the appropriate time, Teledyne may establish a reserve of approximately $40.0 million related to certain accounts receivable and inventory, as well as accrue for other additional AOS-related expenses.

Forward-Looking Statements Cautionary Notice

This press release contains forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995, relating to earnings, growth opportunities, acquisitions, product sales, capital expenditures, pension matters, stock option compensation expense, our credit facility, interest expense, severance and relocation costs, taxes, exchange rate fluctuations, and strategic plans. Forward-looking statements are generally accompanied by words such as “estimate”, “project”, “predict”, “believes” or “expect”, that convey the uncertainty of future events or outcomes. All statements made in this press release that are not historical in nature should be considered forward-looking.

Actual results could differ materially from these forward-looking statements. Many factors could change the anticipated results, including: disruptions in the global economy; the spread of the COVID-19 virus resulting in production, supply, contractual and other disruptions, including facility closures and furloughs; customer and supplier bankruptcies; changes in demand for products sold to the defense electronics, instrumentation, digital imaging, energy exploration and production, commercial aviation, semiconductor and communications markets; funding, continuation and award of government programs; cuts to defense spending resulting from existing and future deficit reduction measures or changes to U.S. and foreign government spending and budget priorities triggered by the COVID-19 pandemic; impacts from the United Kingdom’s exit from the European Union; uncertainties related to the policies of the U.S. Presidential Administration; the imposition and expansion of, and responses to, trade sanctions and tariffs; and threats to the security of our confidential and proprietary information, including cyber security threats. Lower oil and natural gas prices, as well as instability in the Middle East or other oil producing regions, and new regulations or restrictions relating to energy production, including with respect to hydraulic fracturing, could further negatively affect our businesses that supply the oil and gas industry. Disruptions from the production delay of Boeing’s 737 Max aircraft and continued weakness in the commercial aerospace industry will negatively affect our aerospace electronics businesses. In addition, financial market fluctuations affect the value of the company's pension assets.

Changes in the policies of U.S. and foreign governments, including economic sanctions, could result, over time, in reductions or realignment in defense or other government spending and further changes in programs in which the company participates.

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 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 U.S. and foreign government policy changes or actions and exchange rate fluctuations.

We continue to take action to assure compliance with the internal controls, disclosure controls and other requirements of the Sarbanes-Oxley Act of 2002. While we believe our control systems are effective, there are inherent limitations in all control systems, and misstatements due to error or fraud may occur and may not be detected.

Readers are urged to read the company’s periodic reports filed with the Securities and Exchange Commission (“SEC”) for a more complete description of the company, its businesses, its strategies and the various risks that the company faces. Various risks are identified in Teledyne’s 2019 Annual Report on Form 10-K. The company assumes no duty to publicly update or revise any forward-looking statements, whether as a result of new information or otherwise.

A live webcast of Teledyne’s first quarter earnings conference call will be held at 11:00 a.m. (Eastern) on Wednesday, April 22, 2020. To access the call, go to www.teledyne.com approximately ten minutes before the scheduled start time. A replay will also be available for one month starting at 12:00 p.m. (Eastern) on Wednesday, April 22, 2020.

TELEDYNE TECHNOLOGIES INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

FOR THE THREE MONTHS ENDED

MARCH 29, 2020 AND MARCH 31, 2019

(Unaudited - in millions, except per share amounts)

 

 

 

 

 

 

 

First
Quarter

 

First
Quarter

 

 

2020

 

 

2019

 

Net sales

 

$

784.6

 

 

 

$

745.2

 

 

Costs and expenses:

 

 

 

 

Costs of sales

 

492.6

 

 

 

463.9

 

 

Selling, general and administrative expenses

 

188.0

 

 

 

184.0

 

 

Total costs and expenses

 

680.6

 

 

 

647.9

 

 

Operating income

 

104.0

 

 

 

97.3

 

 

Interest and debt expense, net

 

(4.1

)

 

 

(5.4

)

 

Non-service retirement benefit income

 

2.5

 

 

 

2.2

 

 

Other expense, net

 

(1.4

)

 

 

(1.2

)

 

Income before income taxes

 

101.0

 

 

 

92.9

 

 

Provision for income taxes

 

18.8

 

 

 

17.6

 

 

Net income

 

$

82.2

 

 

 

$

75.3

 

 

 

 

 

 

 

Diluted earnings per common share

 

$

2.17

 

 

 

$

2.02

 

 

 

 

 

 

 

Weighted average diluted common shares outstanding

 

37.8

 

 

 

37.2

 

 

TELEDYNE TECHNOLOGIES INCORPORATED

SUMMARY OF SEGMENT NET SALES AND OPERATING INCOME

FOR THE THREE MONTHS ENDED

MARCH 29, 2020 AND MARCH 31, 2019

(Unaudited - in millions)

 

 

 

 

 

 

 

 

 

First Quarter

 

First Quarter

 

%
Change

 

 

2020

 

 

2019

 

 

Net sales:

 

 

 

 

 

 

Instrumentation

 

$

285.1

 

 

 

$

256.5

 

 

 

11.2

%

Digital Imaging

 

246.7

 

 

 

232.4

 

 

 

6.2

%

Aerospace and Defense Electronics

 

156.3

 

 

 

166.6

 

 

 

(6.2

)%

Engineered Systems

 

96.5

 

 

 

89.7

 

 

 

7.6

%

Total net sales

 

$

784.6

 

 

 

$

745.2

 

 

 

5.3

%

Operating income:

 

 

 

 

 

 

Instrumentation

 

$

50.8

 

 

 

$

39.9

 

 

 

27.3

%

Digital Imaging

 

43.8

 

 

 

36.6

 

 

 

19.7

%

Aerospace and Defense Electronics

 

13.4

 

 

 

32.5

 

 

 

(58.8

)%

Engineered Systems

 

11.4

 

 

 

6.4

 

 

 

78.1

%

Corporate expense

 

(15.4

)

 

 

(18.1

)

 

 

(14.9

)%

Operating income

 

104.0

 

 

 

97.3

 

 

 

6.9

%

Interest and debt expense, net

 

(4.1

)

 

 

(5.4

)

 

 

(24.1

)%

Non-service retirement benefit income

 

2.5

 

 

 

2.2

 

 

 

13.6

%

Other expense, net

 

(1.4

)

 

 

(1.2

)

 

 

16.7

%

Income before income taxes

 

101.0

 

 

 

92.9

 

 

 

8.7

%

Provision for income taxes

 

18.8

 

 

 

17.6

 

 

 

6.8

%

Net income

 

$

82.2

 

 

 

$

75.3

 

 

 

9.2

%

TELEDYNE TECHNOLOGIES INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited – in millions)

 

 

 

 

 

 

 

March 29, 2020

 

December 29, 2019

ASSETS

 

 

 

 

Cash and cash equivalents

 

$

231.4

 

 

$

199.5

 

Accounts receivable, net

 

668.1

 

 

660.9

 

Inventories, net

 

401.1

 

 

393.4

 

Prepaid expenses and other current assets

 

63.2

 

 

59.9

 

Total current assets

 

1,363.8

 

 

1,313.7

 

Property, plant and equipment, net

 

475.5

 

 

487.9

 

Goodwill and acquired intangible assets, net

 

2,465.5

 

 

2,481.3

 

Prepaid pension asset

 

77.4

 

 

71.8

 

Other assets, net

 

202.8

 

 

225.1

 

Total assets

 

$

4,585.0

 

 

$

4,579.8

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

Accounts payable

 

$

263.4

 

 

$

271.1

 

Accrued liabilities

 

395.6

 

 

391.5

 

Current portion of long-term debt and other debt

 

100.6

 

 

100.6

 

Total current liabilities

 

759.6

 

 

763.2

 

Long-term debt

 

749.1

 

 

750.0

 

Other long-term liabilities

 

323.3

 

 

351.9

 

Total liabilities

 

1,832.0

 

 

1,865.1

 

Total stockholders’ equity

 

2,753.0

 

 

2,714.7

 

Total liabilities and stockholders’ equity

 

$

4,585.0

 

 

$

4,579.8

 





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