Teledyne Technologies Incorporated (NYSE:TDY):
- Record third quarter sales of $1,402.5 million, an increase
of 2.9% compared with last year
- Record third quarter GAAP operating margin of 18.8% and
diluted earnings per share of $4.15
- All-time record non-GAAP operating margin of 22.8% and
diluted earnings per share of $5.05
- Increasing full year 2023 GAAP earnings outlook to $15.82 to
$15.96 diluted earnings per share, compared with the prior outlook
of $15.60 to $15.88, and increasing full year non-GAAP earnings
outlook to $19.20 to $19.30 diluted earnings per share, compared
with the prior outlook of $19.00 to $19.20
- Consolidated Leverage Ratio improved to slightly below
2.0x
- Acquired Xena Networks on October 13, 2023
Teledyne today reported third quarter 2023 net sales of $1,402.5
million, compared with net sales of $1,363.6 million for the third
quarter of 2022, an increase of 2.9%. Net income attributable to
Teledyne was $198.6 million ($4.15 diluted earnings per share) for
the third quarter of 2023, compared with $178.3 million ($3.74
diluted earnings per share) for the third quarter of 2022, an
increase of 11.4%. The third quarter of 2023 included $49.1 million
of pretax acquired intangible asset amortization expense, $5.8
million of pretax FLIR integration costs and $1.0 million of
acquisition related discrete income tax expense. Excluding these
items, non-GAAP net income attributable to Teledyne for the third
quarter of 2023 was $241.9 million ($5.05 diluted earnings per
share). The third quarter of 2022 included $48.9 million of pretax
acquired intangible asset amortization expense as well as $0.8
million of acquisition related discrete income tax expense.
Excluding these items, non-GAAP net income attributable to Teledyne
for the third quarter of 2022 was $216.5 million ($4.54 diluted
earnings per share). Operating margin was 18.8% for the third
quarter of 2023, compared with 18.0% for the third quarter of 2022.
Excluding the non-GAAP items discussed above, non-GAAP operating
margin for the third quarter of 2023 was 22.8%, compared with 21.6%
for the third quarter of 2022.
“In the third quarter, we achieved record operating margin and
earnings per share,” said Robert Mehrabian, Chairman, President and
Chief Executive Officer. “The results across Teledyne were once
again driven by our balanced business portfolio. Our overall
performance was led by growth in our marine, medical, aerospace and
certain defense businesses, coupled with vigilant cost control.
While sales increased year-over-year, revenue was impacted by a
stronger U.S. dollar throughout the third quarter and some
deterioration in certain end markets, such as industrial automation
and laboratory instrumentation. Nevertheless, given our focus on
operational excellence, operating margin increased sequentially and
year-over-year in the Digital Imaging and Instrumentation segments,
helping generate record earnings. We remain highly confident in our
balanced and resilient mix of commercial and government businesses
and our ability to acquire and integrate complementary businesses.
We were pleased to have added Xena Networks to our test and
measurement business, which also continued to perform very well in
a challenging environment.”
Review of Operations
Comparisons are with the third quarter of 2022, unless noted
otherwise.
Digital Imaging
The Digital Imaging segment’s third quarter 2023 net sales were
$775.8 million, compared with $777.9 million, a decrease of 0.3%.
Operating income was $136.3 million for the third quarter of 2023,
compared with $133.7 million, an increase of 1.9%.
The third quarter of 2023 net sales included $25.8 million in
incremental sales from recent acquisitions, as well as greater
sales of x-ray products, infrared imaging detectors and
surveillance systems, offset by lower sales of unmanned ground
systems for defense applications, micro-electro-mechanical systems
(“MEMS”), commercial maritime products and industrial imaging
cameras. The increase in operating income was primarily due to
favorable product mix, partially offset by $5.8 million of
FLIR-related integration costs recorded in the third quarter of
2023. Acquired intangible amortization expense for the third
quarter of 2023 was $45.4 million compared with $44.7 million.
Instrumentation
The Instrumentation segment’s third quarter 2023 net sales were
$329.1 million, compared with $306.4 million, an increase of 7.4%.
Operating income was $85.5 million for the third quarter of 2023,
compared with $71.1 million, an increase of 20.3%.
The third quarter of 2023 net sales increase resulted from
higher sales across the marine instrumentation and test and
measurement instrumentation product lines. Sales of marine
instrumentation increased $22.5 million and sales of test and
measurement instrumentation increased $2.0 million. Sales of
environmental instrumentation decreased $1.8 million. The increase
in operating income primarily reflected the impact of higher sales
and favorable product mix.
Aerospace and Defense Electronics
The Aerospace and Defense Electronics segment’s third quarter
2023 net sales were $183.3 million, compared with $169.5 million,
an increase of 8.1%. Operating income was $49.4 million for the
third quarter of 2023, compared with $44.3 million, an increase of
11.5%.
The third quarter of 2023 net sales reflected higher sales of
$7.0 million for aerospace electronics and $6.8 million for defense
electronics. The increase in operating income primarily reflected
the impact of higher sales.
Engineered Systems
The Engineered Systems segment’s third quarter 2023 net sales
were $114.3 million, compared with $109.8 million, an increase of
4.1%. Operating income was $10.9 million for the third quarter of
2023, compared with $11.9 million, a decrease of 8.4%.
The third quarter of 2023 net sales reflected higher sales of
$2.7 million for engineered products and $1.8 million for energy
systems. The decrease in operating income was primarily driven by
program mix, with the third quarter of 2023 having a higher
percentage of lower margin space program revenue.
Additional Financial Information
Cash Flow
Cash provided by operating activities was $278.2 million for the
third quarter of 2023 compared with $268.9 million. Depreciation
and amortization expense for the third quarter of 2023 was $76.9
million compared with $80.8 million. Stock-based compensation
expense for the third quarter of 2023 was $8.0 million compared
with $6.7 million.
Capital expenditures for the third quarter of 2023 were $23.0
million compared with $16.7 million. Teledyne received $12.2
million from the exercise of stock options in the third quarter of
2023 compared with $0.9 million.
As of October 1, 2023, net debt was $2,735.5 million which is
calculated as total debt of $3,244.1 million, net of cash and cash
equivalents of $508.6 million. As of January 1, 2023, net debt was
$3,282.5 million and included total debt of $3,920.6 million, net
of cash and cash equivalents of $638.1 million. During the first
nine months of 2023, Teledyne repaid approximately $680 million of
debt, including $300.0 million of debt that matured in April 2023
and $370.0 million of floating rate debt under its term loan due
May 2026 and under its credit facility. Teledyne also repurchased
and retired $10.0 million of its Fixed Rate Senior Notes due April
2031, recording a $1.6 million non-cash gain on the extinguishment
of this debt.
As of October 1, 2023, $1,130.9 million was available under the
$1.15 billion credit facility, after reductions of $19.1 million in
outstanding letters of credit.
Third Quarter
Free Cash Flow
2023
2022
Cash provided by operating activities
$
278.2
$
268.9
Capital expenditures for property, plant
and equipment
(23.0
)
(16.7
)
Free cash flow
$
255.2
$
252.2
Income Taxes
The effective tax rate for the third quarter of 2023 was 19.2%,
compared with 23.0%. The third quarter of 2023 reflected net
discrete income tax benefits of $6.1 million compared with $0.3
million. The third quarter of 2023 amount primarily related to
income tax benefits related to stock-based accounting. Excluding
the net discrete income tax items in both periods, the effective
tax rates would have been 21.7% for the third quarter of 2023,
compared with 23.1%.
Other
Corporate expense was $17.8 million for the third quarter of
2023 compared with $15.8 million, with the increase primarily
related to higher professional fees. Non-service retirement benefit
income was $3.1 million for the third quarter of 2023 compared with
$2.9 million. Interest expense, net of interest income, was $18.4
million for the third quarter of 2023 compared with $22.0 million.
The decrease related to reduced outstanding borrowings with lower
weighted average interest rates compared to the third quarter of
2022.
Outlook
Based on its current outlook, the company’s management believes
that fourth quarter 2023 GAAP diluted earnings per share will be in
the range of $4.07 to $4.21 and full year 2023 GAAP diluted
earnings per share will be in the range of $15.82 to $15.96. The
company's management further believes that fourth quarter 2023
non-GAAP diluted earnings per share will be in the range of $4.95
to $5.05 and full year 2023 non-GAAP diluted earnings per share
will be in the range of $19.20 to $19.30. The non-GAAP outlook
excludes acquired intangible asset amortization for all
acquisitions, further FLIR integration costs and
acquisition-related tax matters. The company’s annual expected tax
rate for 2023 is 22.1%, before discrete tax items.
Use of Non-GAAP Financial Measures
We report our financial results in accordance with generally
accepted accounting principles in the United States (“GAAP”). We
supplement the reporting of our financial results determined under
GAAP with certain non-GAAP financial measures. The non-GAAP
financial measures presented provides management, financial
analysts, and investors with additional useful information in
evaluating the performance of the company. The non-GAAP financial
measures should be considered in addition to, and not as a
substitute for, financial measures prepared in accordance with
GAAP. Further details on reasons that we use non-GAAP financial
measures, a reconciliation of these measures to the most directly
comparable GAAP measures, and other information relating to these
measures are included following our GAAP financial statements.
Forward-Looking Statements Cautionary Notice
This earnings release contains forward-looking statements, as
defined in the Private Securities Litigation Reform Act of 1995,
with respect to management’s beliefs about the financial condition,
results of operations, acquisitions and product synergies,
integration costs, tax matters and businesses of Teledyne in the
future. Forward-looking statements involve risks and uncertainties,
are based on the current expectations of the management of Teledyne
and are subject to uncertainty and changes in circumstances.
The forward-looking statements contained herein may include
statements relating to stock-based compensation expense, tax rates,
anticipated capital expenditures and product developments, and
other strategic options. Forward-looking statements generally are
accompanied by words such as “projects,” “intends,” “expects,”
“anticipates,” “targets,” “estimates,” “will” and words of similar
import that convey the uncertainty of future events or outcomes.
All statements made in this communication that are not historical
in nature should be considered forward-looking. By its nature,
forward-looking information is not a guarantee of future
performance or results and involves risks and uncertainties because
it relates to events and depends on circumstances that will occur
in the future.
Actual results could differ materially from these
forward-looking statements. Many factors could change anticipated
results, including: ongoing challenges and uncertainties posed by
the lingering COVID pandemic for businesses and governments around
the world; changes in relevant tax and other laws; foreign currency
exchange risks; rising interest rates; risks associated with
indebtedness, as well as our ability to reduce indebtedness and the
timing thereof; the impact of semiconductor and other supply chain
shortages; higher inflation, including wage competition and higher
shipping costs; labor shortages and competition for skilled
personnel; the inability to develop and market new competitive
products; inherent uncertainties involved in the estimates and
judgments used in the preparation of financial statements and the
providing of estimates of financial measures, in accordance with
U.S. GAAP and related standards; disruptions in the global economy;
the ongoing conflict in Israel and neighboring regions; the ongoing
conflict between Russia and Ukraine, including the impact to energy
prices and availability, especially in Europe; 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
inflation, rising interest costs, and economic conditions; 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; the continuing review and resolution
of FLIR’s trade compliance and tax matters; escalating economic and
diplomatic tension between China and the United States; threats to
the security of our confidential and proprietary information,
including cybersecurity threats; natural and man-made disasters,
including those related to or intensified by climate change; and
our ability to achieve emission reduction targets and decrease our
carbon footprint. 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 those implemented in response to climate change, could
further negatively affect our businesses that supply the oil and
gas industry. Weakness in the commercial aerospace industry
negatively affects the markets of our commercial aviation
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 key management and 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.
Additional factors that could cause results to differ materially
from those described above can be found in Teledyne’s Annual Report
on Form 10-K for the year ended January 1, 2023, as well as
subsequent Quarterly Reports on Form 10-Q and Current Reports on
Form 8-K, all of which are on file with the SEC and available in
the “Investors” section of Teledyne’s website, teledyne.com, under
the heading “Investor Information” and in other documents Teledyne
files with the SEC.
All forward-looking statements speak only as of the date they
are made and are based on information available at that time.
Teledyne assumes no obligation to update forward-looking statements
to reflect circumstances or events that occur after the date the
forward-looking statements were made or to reflect the occurrence
of unanticipated events except as required by federal securities
laws. As forward-looking statements involve significant risks and
uncertainties, caution should be exercised against placing undue
reliance on such statements.
A live webcast of Teledyne’s third quarter earnings conference
call will be held at 11:00 a.m. (Eastern) on Wednesday, October 25,
2023. To access the call, go to
www.teledyne.com/investors/events-and-presentations 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, October 25, 2023.
TELEDYNE TECHNOLOGIES
INCORPORATED
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
FOR THE THIRD QUARTER AND NINE
MONTHS ENDED
OCTOBER 1, 2023 AND OCTOBER 2,
2022
(Unaudited - in millions, except
per share amounts)
Third Quarter
Third Quarter
Nine Months
Nine Months
2023
2022
2023
2022
Net sales
$
1,402.5
$
1,363.6
$
4,210.5
$
4,040.4
Costs and expenses:
Costs of sales
797.2
785.8
2,394.2
2,327.0
Selling, general and administrative
291.9
283.7
905.3
861.4
Acquired intangible asset amortization
49.1
48.9
148.1
153.8
Total costs and expenses
1,138.2
1,118.4
3,447.6
3,342.2
Operating income (loss)
264.3
245.2
762.9
698.2
Interest and debt income (expense),
net
(18.4
)
(22.0
)
(61.7
)
(66.8
)
Gain (loss) on debt extinguishment
—
—
1.6
10.6
Non-service retirement benefit income
(expense), net
3.1
2.9
9.3
8.6
Other income (expense), net
(2.9
)
5.2
(7.4
)
5.2
Income (loss) before income taxes
246.1
231.3
704.7
655.8
Provision (benefit) for income taxes
(a)
47.3
53.1
141.6
93.7
Net income (loss) including noncontrolling
interest
198.8
178.2
563.1
562.1
Less: Net income (loss) attributable to
noncontrolling interest
0.2
(0.1
)
0.5
(0.1
)
Net income (loss) attributable to
Teledyne
$
198.6
$
178.3
$
562.6
$
562.2
Diluted earnings per common share
$
4.15
$
3.74
$
11.75
$
11.79
Weighted average diluted common shares
outstanding
47.9
47.7
47.9
47.7
(a)
The third quarter of 2023 includes net
discrete income tax benefits of $6.1 million and the first nine
months of 2023 includes net discrete income tax benefits of $14.1
million. The third quarter of 2022 includes net discrete income tax
benefits of $0.3 million and the first nine months of 2022 includes
net discrete income tax benefits of $57.8 million.
This financial statement was prepared in accordance with
U.S. GAAP.
TELEDYNE TECHNOLOGIES
INCORPORATED
SUMMARY OF SEGMENT NET SALES
AND OPERATING INCOME
FOR THE THIRD QUARTER AND NINE
MONTHS ENDED
OCTOBER 1, 2023 AND OCTOBER 2,
2022
(Unaudited - $ in millions)
Third Quarter
Third Quarter
% Change
Nine Months
Nine Months
% Change
2023
2022
2023
2022
Net sales:
Digital Imaging
$
775.8
$
777.9
(0.3
)%
$
2,341.6
$
2,304.2
1.6
%
Instrumentation
329.1
306.4
7.4
%
991.0
927.8
6.8
%
Aerospace and Defense Electronics
183.3
169.5
8.1
%
542.5
504.5
7.5
%
Engineered Systems
114.3
109.8
4.1
%
335.4
303.9
10.4
%
Total net sales
$
1,402.5
$
1,363.6
2.9
%
$
4,210.5
$
4,040.4
4.2
%
Operating income (loss):
Digital Imaging
$
136.3
$
133.7
1.9
%
$
383.1
$
367.3
4.3
%
Instrumentation
85.5
71.1
20.3
%
247.6
216.3
14.5
%
Aerospace and Defense Electronics
49.4
44.3
11.5
%
149.6
131.3
13.9
%
Engineered Systems
10.9
11.9
(8.4
)%
32.4
29.9
8.4
%
Corporate expense
(17.8
)
(15.8
)
12.7
%
(49.8
)
(46.6
)
6.9
%
Operating income (loss)
264.3
245.2
7.8
%
762.9
698.2
9.3
%
Interest and debt income (expense),
net
(18.4
)
(22.0
)
(16.4
)%
(61.7
)
(66.8
)
(7.6
)%
Gain (loss) on debt extinguishment
—
—
—
%
1.6
10.6
(84.9
)%
Non-service retirement benefit income
(expense), net
3.1
2.9
6.9
%
9.3
8.6
8.1
%
Other income (expense), net
(2.9
)
5.2
*
(7.4
)
5.2
*
Income (loss) before income taxes
246.1
231.3
6.4
%
704.7
655.8
7.5
%
Provision (benefit) for income taxes
(a)
47.3
53.1
(10.9
)%
141.6
93.7
51.1
%
Net income (loss) including noncontrolling
interest
198.8
178.2
11.6
%
563.1
562.1
0.2
%
Less: Net income (loss) attributable to
noncontrolling interest
0.2
(0.1
)
*
0.5
(0.1
)
*
Net income (loss) attributable to
Teledyne
$
198.6
$
178.3
11.4
%
$
562.6
$
562.2
0.1
%
* not meaningful
(a)
The third quarter of 2023 includes net
discrete income tax benefits of $6.1 million and the first nine
months of 2023 includes net discrete income tax benefits of $14.1
million. The third quarter of 2022 includes net discrete income tax
benefits of $0.3 million and the first nine months of 2022 includes
net discrete income tax benefits of $57.8 million.
This financial statement was prepared in accordance with
U.S. GAAP.
TELEDYNE TECHNOLOGIES
INCORPORATED
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited – in
millions)
October 1, 2023
January 1, 2023
ASSETS
Cash and cash equivalents
$
508.6
$
638.1
Accounts receivable and unbilled
receivables, net
1,194.9
1,158.4
Inventories, net
962.0
890.7
Prepaid expenses and other current
assets
155.0
130.7
Total current assets
2,820.5
2,817.9
Property, plant and equipment, net
754.1
769.8
Goodwill and acquired intangible assets,
net
10,187.2
10,313.6
Prepaid pension assets
190.0
178.4
Other assets, net
264.0
274.3
Total assets
$
14,215.8
$
14,354.0
LIABILITIES AND EQUITY
Accounts payable
$
454.9
$
505.7
Accrued liabilities
777.1
717.6
Current portion of long-term debt
450.1
300.1
Total current liabilities
1,682.1
1,523.4
Long-term debt, net of current portion
2,794.0
3,620.5
Other long-term liabilities
1,013.6
1,037.2
Total liabilities
5,489.7
6,181.1
Redeemable noncontrolling interest
4.2
3.7
Total stockholders' equity
8,721.9
8,169.2
Total liabilities and equity
$
14,215.8
$
14,354.0
This financial statement was prepared in
accordance with U.S. GAAP.
TELEDYNE TECHNOLOGIES
INCORPORATED
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES
FOR THE THIRD QUARTER AND NINE
MONTHS ENDED OCTOBER 1, 2023 AND OCTOBER 2, 2022
(Unaudited - in millions, except
per share amounts)
Third Quarter 2023
Third Quarter 2022
Income (loss) before income
taxes
Net (loss) income attributable
to Teledyne
Diluted earnings per common
share
Income (loss) before income
taxes
Net (loss) income attributable
to Teledyne
Diluted earnings per common
share
GAAP
$
246.1
$
198.6
$
4.15
$
231.3
$
178.3
$
3.74
Adjusted for specified items:
FLIR integration costs
5.8
4.5
0.09
—
—
—
Acquired intangible asset amortization
49.1
37.8
0.79
48.9
37.4
0.78
Acquisition-related tax matters
—
1.0
0.02
—
0.8
0.02
Non-GAAP
$
301.0
$
241.9
$
5.05
$
280.2
$
216.5
$
4.54
Nine Months 2023
Nine Months 2022
Income (loss) before income
taxes
Net (loss) income attributable
to Teledyne
Diluted earnings per common
share
Income (loss) before income
taxes
Net (loss) income attributable
to Teledyne
Diluted earnings per common
share
GAAP
$
704.7
$
562.6
$
11.75
$
655.8
$
562.2
$
11.79
Adjusted for specified items:
FLIR integration costs
5.8
4.5
0.09
—
—
—
Acquired intangible asset amortization
148.1
114.0
2.37
153.8
118.1
2.48
Acquisition-related tax matters
—
1.7
0.04
—
(48.6
)
(1.03
)
Non-GAAP
$
858.6
$
682.8
$
14.25
$
809.6
$
631.7
$
13.24
Third Quarter 2023
Third Quarter 2022
Operating income
(loss)
Operating margin
Operating income
(loss)
Operating margin
GAAP
$
264.3
18.8
%
$
245.2
18.0
%
Adjusted for specified items:
FLIR integration costs
5.8
—
Acquired intangible asset amortization
49.1
48.9
Non-GAAP
$
319.2
22.8
%
$
294.1
21.6
%
Nine Months 2023
Nine Months 2022
Operating income
(loss)
Operating margin
Operating income
(loss)
Operating margin
GAAP
$
762.9
18.1
%
$
698.2
17.3
%
Adjusted for specified items:
FLIR integration costs
5.8
—
Acquired intangible asset amortization
148.1
153.8
Non-GAAP
$
916.8
21.8
%
$
852.0
21.1
%
TELEDYNE TECHNOLOGIES
INCORPORATED
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES
(Unaudited - in
millions)
Third Quarter 2023
GAAP Operating Income
(loss)
Acquired intangible asset
amortization
FLIR integration costs
Non-GAAP Operating Income
(loss)
Digital Imaging
$
136.3
$
45.4
$
5.8
$
187.5
Instrumentation
85.5
3.5
—
89.0
Aerospace and Defense Electronics
49.4
0.2
—
49.6
Engineered Systems
10.9
—
—
10.9
Corporate expense
(17.8
)
—
—
(17.8
)
Total
$
264.3
$
49.1
$
5.8
$
319.2
Third Quarter 2022
GAAP Operating Income
(loss)
Acquired intangible asset
amortization
FLIR integration costs
Non-GAAP Operating Income
(loss)
Digital Imaging
$
133.7
$
44.7
$
—
$
178.4
Instrumentation
71.1
4.0
—
75.1
Aerospace and Defense Electronics
44.3
0.2
—
44.5
Engineered Systems
11.9
—
—
11.9
Corporate expense
(15.8
)
—
—
(15.8
)
Total
$
245.2
$
48.9
$
—
$
294.1
Nine Months 2023
GAAP Operating Income
(loss)
Acquired intangible asset
amortization
FLIR integration costs
Non-GAAP Operating Income
(loss)
Digital Imaging
$
383.1
$
136.8
$
5.8
$
525.7
Instrumentation
247.6
10.7
—
258.3
Aerospace and Defense Electronics
149.6
0.6
—
150.2
Engineered Systems
32.4
—
—
32.4
Corporate expense
(49.8
)
—
—
(49.8
)
Total
$
762.9
$
148.1
$
5.8
$
916.8
Nine Months 2022
GAAP Operating Income
(loss)
Acquired intangible asset
amortization
FLIR integration costs
Non-GAAP Operating Income
(loss)
Digital Imaging
$
367.3
$
139.6
$
—
$
506.9
Instrumentation
216.3
13.6
—
229.9
Aerospace and Defense Electronics
131.3
0.6
—
131.9
Engineered Systems
29.9
—
—
29.9
Corporate expense
(46.6
)
—
—
(46.6
)
Total
$
698.2
$
153.8
$
—
$
852.0
TELEDYNE TECHNOLOGIES
INCORPORATED
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES
(Unaudited - in
millions)
October 1, 2023
January 1, 2023
Current portion of long-term debt -
GAAP
$
450.1
$
300.1
Long-term debt - GAAP
2,794.0
3,620.5
Total debt - non-GAAP
3,244.1
3,920.6
Less cash and cash equivalents - GAAP
(508.6
)
(638.1
)
Net debt - non-GAAP
$
2,735.5
$
3,282.5
Fourth Quarter 2023
Twelve Months 2023
Low
High
Low
High
GAAP Diluted Earnings Per Common Share
Outlook
$
4.07
$
4.21
$
15.82
$
15.96
Adjusted for specified items:
FLIR integration costs
0.07
0.05
0.16
0.14
Acquired intangible asset amortization
0.81
0.79
3.18
3.16
Acquisition-related tax matters
—
—
0.04
0.04
Non-GAAP Diluted Earnings Per Common
Share Outlook
$
4.95
$
5.05
$
19.20
$
19.30
Explanation of Non-GAAP Financial Measures
We report our financial results in accordance with GAAP.
However, management believes that, in order to more fully
understand our short-term and long-term financial and operational
trends, and to aid in comparability with our competitors, investors
and financial analysts may wish to consider the impact of certain
items resulting from our acquisitions which have an infrequent or
non-recurring impact on operations or assist in understanding our
operations pre-acquisition. Accordingly, we present non-GAAP
financial measures as a supplement to the financial measures we
present in accordance with GAAP. These non-GAAP financial measures
provide management, investors and financial analysts with
additional means to understand and evaluate the operating results
and trends in our ongoing business by adjusting for certain
expenses and other items. Management believes these non-GAAP
financial measures also provide additional means of evaluating
period-over-period operating performance. In addition, management
understands that some investors and financial analysts find this
information helpful in analyzing our financial and operational
performance and comparing this performance to our peers and
competitors. The company’s 2023 diluted earnings per common share
guidance is also presented on a non-GAAP basis.
The non-GAAP financial measures are not meant to be considered
superior to, or a substitute for, our financial statements prepared
in accordance with GAAP. There are material limitations associated
with non-GAAP financial measures because they exclude charges that
have an effect on our reported results and, therefore, should not
be relied upon as the sole financial measures by which to evaluate
our financial results. Management compensates and believes that
investors should compensate for these limitations by viewing the
non-GAAP financial measures in conjunction with the GAAP financial
measures. In addition, the non-GAAP financial measures included in
this earnings announcement may be different from, and therefore may
not be comparable to, similar measures used by other companies. The
non-GAAP financial measures are also used by our management to
evaluate our operating performance and benchmark our results
against our historical performance and the performance of our
peers.
Our non-GAAP measures are as follows:
Non-GAAP income before income taxes, net income and diluted
earnings per common share
These non-GAAP measures provided a supplemental view of income
before taxes, net income, and diluted earnings per common share.
These non-GAAP measures exclude certain FLIR acquisition
integration-related costs, acquired intangible asset amortization,
the remeasurement of deferred taxes related to acquired intangible
assets due to changes in tax laws, and the tax benefits or costs
related to the settlement or other resolution of the FLIR tax
reserves. We also adjust for any post-acquisition interest on
certain income tax reserves related to FLIR. We adjust for any
income tax impact related to these items to take into account the
tax treatment and related tax rate and changes in tax rates that
apply to each adjustment in the applicable tax jurisdiction.
Generally, this results in the tax impact at the U.S. marginal tax
rate for certain adjustments, including the majority of
amortization of intangible assets, whereas the tax impact of other
adjustments, including transaction expenses, depend on whether the
amounts are deductible in the respective tax jurisdictions and the
applicable tax rates in those jurisdictions. We believe these
measures provide investors and management with additional means to
understand and evaluate the operating results of our business by
adjusting for certain expenses and other items and present an
alternative view of our performance compared to prior periods.
Non-GAAP operating income and operating margin
We define non-GAAP operating margin as non-GAAP operating income
divided by net sales. These non-GAAP measures exclude certain FLIR
acquisition integration-related costs and acquired intangible asset
amortization. We believe these measures provide investors and
management with additional means to understand and evaluate the
operating results of our business by adjusting for certain expenses
and other items and present an alternative view of our performance
compared to prior periods.
Non-GAAP total debt and net debt
We define non-GAAP total debt as the sum of current portion of
long-term debt and other debt and long-term debt. We define net
debt as the difference between non-GAAP total debt less cash and
cash equivalents. The company believes that this supplemental
non-GAAP information is useful to assist investors and management
in analyzing the company’s liquidity.
Non-GAAP diluted earnings per common share outlook
These non-GAAP measures represent our earnings per common share
outlook for the fourth quarter 2023 and total year 2023 on a fully
diluted basis, excluding certain FLIR integration costs, acquired
intangible asset amortization for all acquisitions and
acquisition-related tax matters.
Non-GAAP cash provided by operations and free cash
flow
We define free cash flow as cash provided by operating
activities (a measure prescribed by GAAP) less capital expenditures
for property, plant and equipment. We believe 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.
Non-GAAP line items used in tables
Management excludes the effect of each of the acquisition
related items identified below to arrive at the applicable non-GAAP
financial measure referenced in the tables for the reasons set
forth below with respect to that item:
- Acquired intangible asset
amortization – We believe that excluding the amortization of
acquired intangible assets, which primarily represents purchased
technology and customer relationships, as well as purchase order
and contract backlog, provides an alternative way for investors to
compare our operations pre-acquisition to those post-acquisition
and to those of our competitors that have pursued internal growth
strategies. However, we note that companies that grow internally
will incur costs to develop intangible assets that will be expensed
in the period incurred, which may make a direct comparison more
difficult.
- FLIR integration costs – Included
in our GAAP presentation of cost of sales and selling, general and
administrative expenses are expenses incurred in connection with
further integration-related costs related to the FLIR acquisition
such as facility consolidation costs, facility lease impairments
and employee separation costs. We exclude these costs from our
non-GAAP measures because we believe it does not reflect our
ongoing financial performance.
- Acquisition-related tax matters –
Included in our tax provision is post-acquisition interest on
certain income tax reserves related to FLIR, as well as the tax
benefits or costs related to the settlement or other resolution of
the FLIR tax reserves. We exclude these impacts from our non-GAAP
measures because we believe it does not reflect our ongoing
financial performance.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231025227896/en/
Jason VanWees (805) 373-4542
Teledyne Technologies (NYSE:TDY)
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