Teledyne Technologies Reports First Quarter Results

Free Cash Flow (a)

 

First Quarter

(in millions, brackets indicate use of funds)

 

2021

 

 

2020

Cash provided by operating activities

 

$

124.9

 

 

 

$

76.4

 

 

Capital expenditures for property, plant and equipment

 

(17.6

)

 

 

(20.2

)

 

Free cash flow

 

107.3

 

 

 

56.2

 

 

FLIR related transaction cash payments, net of tax

 

2.8

 

 

 

 

 

Adjusted free cash flow

 

$

110.1

 

 

 

$

56.2

 

 

(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. Adjusted free cash flow eliminates the impact of cash paid for transaction related expenses for the pending FLIR acquisition on a net of tax basis. 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.

Pending FLIR acquisition and debt activities

Teledyne and FLIR have entered into a definitive agreement under which Teledyne will acquire FLIR in a cash and stock transaction valued at approximately $8.0 billion. Under the terms of the agreement, FLIR stockholders will receive $28.00 per share in cash and 0.0718 shares of Teledyne common stock for each FLIR share, which implied a total purchase price of $56.00 per FLIR share based on Teledyne’s 5-day volume weighted average price as of December 31, 2020. The transaction is expected to close on May 13, 2021, subject to the receipt of required remaining regulatory approvals, including approvals of Teledyne and FLIR stockholders and other customary closing conditions. In the quarter, Teledyne completed various financing activities related to the pending acquisition of FLIR and incurred related interest expense totaling $33.1 million. These activities included entering into a $4.5 billion short term stand-by bridge facility on January 4, 2021, as required by the definitive agreement, resulting in interest expense of $17.2 million. In addition, on March 17, 2021, Teledyne called $493.3 million of existing fixed rate senior notes and incurred debt extinguishment expenses of $13.4 million. On March 22, 2021, Teledyne completed all permanent financing for the pending acquisition of FLIR. The permanent financing consists of $3.0 billion investment-grade bonds (the “Notes”), including $300.0 million aggregate principal amount of 0.65% Notes due 2023, $450.0 million aggregate principal amount of 0.95% Notes due 2024, $450.0 million aggregate principal amount of 1.60% Notes due 2026, $700.0 million aggregate principal amount of 2.25% Notes due 2028 and $1.1 billion aggregate principal amount of 2.75% Notes due 2031. Given the permanent financing, together with certain continuing debt, Teledyne expects its weighted average borrowing cost to be less than two percent upon closing the acquisition. The interest expense incurred in the quarter associated with the $3.0 billion Notes offering related to the pending FLIR acquisition totaled $2.5 million. Previously on March 4, 2021, Teledyne entered into a $1.0 billion Term Loan Credit Agreement and Amended and Restated Credit Agreement with capacity of $1.15 billion both maturing on March 4, 2026. As a result of the completion of the permanent debt financing, on March 22, 2021 Teledyne terminated the $4.5 billion stand-by bridge facility. Teledyne intends to use the proceeds from the Notes together with the proceeds from the $1.0 billion term loan and cash on hand to pay the cash portion of the consideration for the FLIR acquisition and refinance certain existing debt.

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