TELEDYNE TECHNOLOGIES INC Q3 FY2024 earnings call

• Teledyne achieved all-time record sales in the third quarter with sequential growth in each segment. • Robust demand in longer cycle defense, space and energy businesses, while short cycle commercial businesses either stabilized or began to recover. • Repurchased about $354 million of stock, completed 2 acquisitions for $125 million, repaid $450 million of gross debt. • Quarter end leverage remained in the 1.7 times with record free cash flow over nine months. • Orders were greater than sales for the fourth consecutive quarter and ended with record backlog. • Lowered costs to protect margins in weaker markets and grew and increased margin in favorable markets. • Near-term acquisition pipeline is healthy.

Digital Imaging represents over 50% of Teledyne's portfolio. Third quarter 2024 sales declined less than 1% year-over-year. Instrumentation, contributing a little under 25% of sales, had overall third quarter sales increase 6.3% versus last year. Marine Instruments increased 24.1%, Environmental instruments decreased 3.5%, and Test & Measurement decreased 8.6%. Operating margin increased in each product family. Aerospace and Defense Electronics, representing roughly 15% of sales, had third quarter sales increase 9.2% with segment operating profit growing. Engineered Systems, contributing less than 10% to sales, had third quarter revenue increase 9.4% with segment operating profit growing.

• Management currently believes GAAP earnings per share in the fourth quarter of 2024 will be in the range of $4.27 to $4.41 per share with non-GAAP earnings per share in the range of $5.13 to $5.23. • For the full-year of 2024, raised GAAP earnings per share outlook to $17.28 to $17.42 and narrowed non-GAAP outlook to $19.35 to $19.45. • Maintained revenue projection of about $5.624 billion as of the end of Q2 due to uncertainty.

• Global uncertainty including elections, conflicts in Middle East and Europe poses risks. • Boeing strike could risk revenue, especially in the 737 MAX with data acquisition systems. • Environmental business had some weakness with orders below revenue.

Q: Jason, you alluded to some acceleration in sales perhaps coming pull-ins in Q4. Was that mainly in the defense area? Or were there some other markets where you saw that?

A: No, I think it was primarily where we have the largest backlog, which would be the Defense businesses, a little bit from energy, but primarily different ratings.

Q: Greg Konrad asked about parsing Digital Imaging for the quarter and what's seen across different businesses. Any color on what's seen across the different vision end markets either from an order or just trend perspective?

A: Yes. Looking at the two segments within Digital Imaging, traditional historical digital imaging revenue was declined with organic growth negative almost 9.8%, while FLIR did exceptionally well. Defense businesses in FLIR grew 8.2%, commercial businesses were essentially flat but FLIR industrial grew, overall FLIR grew 3.2% with some negatives removed. DALSA 2B had mixed progress with some businesses positive and some negative, but MEMS experiencing good growth.

Q: Andrew Buscaglia asked about sustainability of Marine's strong growth through next year and visibility. How do you see that playing out?

A: Marine has had variation in book-to-bill. It's a mix of offshore energy, science, construction, and military programs. Expectations are it will remain strong, though oil price decline could affect some parts but other businesses should remain healthy.

Q: Joe Giordano asked about what's contemplated in the guide for next quarter and thinking about Boeing. Robert said Boeing strike could risk revenue, especially in the 737 MAX with data acquisition systems, and also talked about environmental business weakness and margins in Digital Imaging.