01—Abstract
Summary
Summary of the 10-K filed February 25, 2014. Cited figures are marked; the original filing is the authoritative source.
Teledyne Technologies Incorporated (TDY) reported record 2013 results in its Form 10-K filed for fiscal year ended December 29, 2013.
Sales rose 9.9% to $2,338.6 milliona from $2,127.3 million in 2012, and net income attributable to Teledyne was $185.0 million, or $4.87 per diluted share, versus $164.1 million ($4.39) a year earlier. Management attributed growth to acquisitions, which contributed $172.0 million of incremental sales, and to higher organic sales in the Instrumentation segment, which rose 27.1% on marine products and the LeCroy test and measurement business. The effective tax rate fell to 17.7% from 28.7%, aided by $21.3 million of net discrete tax benefits.
The company is shifting away from U.S. Government dependence: government sales were about 27% of 2013 sales versus 32% in 2012, and international sales rose to about 44%. Segment operating profit was $277.9 millionb, roughly flat versus $279.8 million, after $24.0 million of pretax severance, facility consolidation and environmental charges. Aerospace and Defense Electronics and Engineered Systems profit declined, while Instrumentation and Digital Imaging improved.
Total debt was $540.2 millionc at year-end, against a $750.0 million revolving credit facility with $662.0 million available, and cash flow from operations was $204.1 million with free cash flow of $131.5 million. Risks highlighted in the filing include sequestration and defense budget cuts, dependence on offshore oil and gas activity for a growing share of revenue, integration of acquisitions, and pension funding. The company spent $128.2 million on 2013 acquisitions and states that it does not anticipate paying cash dividends, intending to retain earnings for growth and acquisitions.
02—Key points
Key Highlights
- Sales of $2,338.6 million in 2013, up 9.9% from $2,127.3 million in 2012, with $172.0 million of incremental sales from acquisitions and 2013 record sales and earnings.
- Net income attributable to Teledyne of $185.0 million, or $4.87 per diluted share, compared with $164.1 million, or $4.39 per diluted share, in 2012.
- Instrumentation segment sales rose 27.1% to $1,022.8 million, driven by marine products (up $106.7 million) and test and measurement from the LeCroy acquisition ($103.6 million).
- Effective tax rate was 17.7% in 2013 versus 28.7% in 2012, including $21.3 million of net discrete tax benefits; excluding these, the rate would have been 27.1%.
- U.S. Government sales fell to about 27% of total sales from 32% in 2012, while international sales rose to about 44% from 39%.
- Pretax charges of $24.0 million for severance, facility consolidation and environmental reserves weighed on 2013 results, with Aerospace and Defense Electronics bearing $15.7 million.
- Total debt of $540.2 million at year-end 2013, with $662.0 million of available capacity under the $750.0 million credit facility; the company does not anticipate paying cash dividends.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2013, Teledyne Technologies kept $0.08.
- Revenue$2.34B100.0%
- Cost of revenue−$1.50B64.1%
- Gross profit$838.6M35.9%
- Operating costs−$598.3M25.6%
- Operating income$240.3M10.3%
- Interest, other & tax−$55.8M2.4%
- Net income$184.5M7.9%
Where FY2013 revenue went
$2.34B- Cost of revenue: $1.50B, 64% of revenue
- SG&A: $598.3M, 26% of revenue
- Net income: $184.5M, 7.9% of revenue
- Interest, other & tax: $55.8M, 2.4% of revenue
Kept 7.9% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2013filed February 25, 2014Financial Statements
FY2013 against FY2012
| Line item | FY2013FY2012 | Change |
|---|---|---|
| Revenue | $2.34B$2.13B | +9.9% |
| Cost of Revenue | $1.50B$1.38B | +8.8% |
| Gross Profit | $838.60M$748.20M | +12.1% |
| SG&A Expenses | $598.30M$505.10M | +18.5% |
| Operating Expenses | $2.10B$1.88B | +11.4% |
| Operating Income | $240.30M$243.10M | −1.2% |
| Interest Expense | $20.90M$18.20M | +14.8% |
| Net Income | $184.50M$164.10M | +12.4% |
| EPS (Basic) | $4.96$4.47 | +11.0% |
| EPS (Diluted) | $4.87$4.39 | +10.9% |
| Shares Outstanding (Basic) | 37.30M36.70M | +1.6% |
| Shares Outstanding (Diluted) | 38.00M37.40M | +1.6% |
05—Questions
Frequently Asked Questions
How did Teledyne perform financially in 2013?
Sales reached $2,338.6 million, up 9.9% from $2,127.3 million in 2012. Net income attributable to Teledyne was $185.0 million, or $4.87 per diluted share, compared with $164.1 million, or $4.39 per diluted share, the prior year. The filing describes these as record sales and earnings.
What drove the growth in sales?
Acquisitions contributed $172.0 million of incremental sales, and organic growth added to the total. Instrumentation sales increased $218.1 million, led by marine instrumentation and the full-year contribution from LeCroy. Aerospace and Defense Electronics sales also rose, while Engineered Systems and Digital Imaging declined slightly.
How dependent is Teledyne on U.S. Government business?
Less dependent than before. U.S. Government sales were about 27% of 2013 total sales, down from 32% in 2012 and 36% in 2011. The Department of Defense accounted for about 21%. The filing notes that about 60% of U.S. Government sales were under fixed-price contracts.
What risks could affect future results?
The filing cites defense budget cuts from sequestration, dependence on offshore oil and gas activity for an increasing share of revenue, the risks of integrating acquisitions, international exposure and currency fluctuations, pension funding requirements, and goodwill impairment. It also notes that a $1.2 million intangible asset impairment was recorded in 2013, with no goodwill impairment.
Does Teledyne pay dividends or repurchase stock?
The company does not anticipate paying cash dividends in the foreseeable future and intends to retain earnings for growth and acquisitions. No shares were repurchased in 2013 or 2012, and 1,841,438 shares remained available under the October 2011 authorization. The filing says the company began repurchasing stock under that program in 2014.
06—Continue