TELEDYNE TECHNOLOGIES INC Q4 FY2024 earnings call

• Robert Mehrabian noted in Q4 2024, record sales increased 5.4%, non-GAAP EPS and operating margins were records, annual free cash flow was a record. Closed Micropac acquisition, expected Excelitas carve-out completion in Q1 2025. 2025 sales may grow ~4%, non-GAAP earnings ~8%.
• Edwin Roks reported on Digital Imaging segment performance.
• George Bobb reported on Instrumentation, Aerospace and Defense Electronics, and Engineered Systems segments.
• Steve Blackwood discussed additional Q4 financials and 2025 outlook, including GAAP and non-GAAP EPS ranges for Q4 and full year 2025.
• Robert Mehrabian spoke on capital allocation, free cash flow, and M&A pipeline.

Digital Imaging segment represents approximately 54% of Teledyne's portfolio. Fourth quarter 2024 sales were a record, increasing 2.5% year-over-year. Performance reflected record sales at Teledyne FLIR with growth in various segments, though industrial machine vision sales declined but were at highest level in 2024. Legacy space-based imaging grew, but some healthcare and X-ray detector sales declined. Non-GAAP operating margins improved. Instrumentation segment, contributing a little under 25% of sales, saw overall fourth quarter sales increase 10.1% year-over-year with growth in all major product lines. Operating margin increased. Aerospace and Defense Electronics segment, representing roughly 14% of sales, had fourth quarter sales up 6.8% driven by Defense Electronics, with GAAP and non-GAAP segment margin increasing. Engineered Systems segment, contributing approximately 8% to sales, had fourth quarter revenue up 11% but operating profit decreased due to higher cost to complete estimates on certain programs.

• Including Micropac acquisition but excluding Excelitas carve-out, 2025 sales may grow approximately 4%, with non-GAAP earnings at approximately 8% at the center of the outlook range.
• For Q4 2025, GAAP earnings per share is expected to be in the range of $3.90 to $4.04 per share, with non-GAAP earnings per share in the range of $4.80 to $4.90.
• For full year 2025, GAAP earnings per share is expected to be in the range of $17.70 to $18.20, with non-GAAP earnings per share in the range of $21.10 to $21.50.
• Excelitas acquisition expected to add about $15 million a month in revenue.

• Strong US dollar impact on 2025 outlook.
• Uncertainty in short cycle market recovery, particularly in some Digital Imaging segments.
• Potential impact of tariffs and government efficiency initiatives on business operations.

Q: Noah Poponak asks about 2025 growth breakdown, Excelitas impact, organic growth.

A: Robert Mehrabian responds that 2025 sales growth is ~4.2% with organic growth ~3.2% and acquisitions contributing ~1.1%, and Excelitas acquisition would add about $15 million a month in revenue.

Q: Greg Konrad asks about organic growth, margin outlook.

A: Robert Mehrabian discusses segment-wise organic growth expectations and margin outlook, stating overall margin expected to grow by 80 basis points.

Q: Andrew Buscaglia asks about FX in organic growth, Excelitas accretion.

A: Robert Mehrabian says FX is accounted for, and Excelitas acquisition should give about $0.15 to $0.20 of accretion in full year if closed.

Q: Damian Karas asks about order trends, policy implications.

A: Robert Mehrabian talks about book-to-bill ratios and how tariffs and government efficiency initiatives may impact the business.

Q: Jordan Lyonnais asks about defense outlook.

A: Robert Mehrabian is bullish on defense part of businesses, citing unmanned systems, electronic warfare, etc.

Q: James Ricchiuti asks about legacy Digital Imaging recovery, conservatism in outlook.

A: Robert Mehrabian discusses reasons for conservatism and potential for improvement in Instrumentation and Digital Imaging.

Q: Joseph Giordano asks about free cash flow outlook, dividend.

A: Robert Mehrabian mentions free cash flow expected to be over $1 billion and comments on dividend not being a priority currently but considering investor feedback.