01—Abstract
Summary
Summary of the 10-K filed February 24, 2020. Cited figures are marked; the original filing is the authoritative source.
Teledyne Technologies Incorporated (TDY) reported fiscal 2019 net sales of $3,163.6 milliona, up from $2,901.8 million in 2018, and net income of $402.3 million ($10.73 per diluted share), compared with $333.8 million ($9.01 per diluted share) in 2018.
Operating income rose to $491.7 millionb from $416.6 million. Growth came from all four segments: Instrumentation ($1,105.1 million), Digital Imaging ($992.9 million), Aerospace and Defense Electronics ($690.1 million) and Engineered Systems ($375.5 million). Acquisitions of the scientific imaging businesses of Roper Technologies, Inc., the gas and flame detection businesses of 3M Company and Micralyne Inc. totaled $484.0 million in cash during 2019, and OakGate Technology, Inc. was acquired for $28.0 million in January 2020.
Cash provided by operating activities was $482.1 millionc and free cash flow was $393.7 million in 2019. Total debt outstanding was $851.8 million at December 29, 2019, against a $750.0 million credit facility with $598.3 million of available borrowing capacity. The company stated it was in compliance with its financial covenants, with a consolidated leverage ratio of 1.4 to 1 versus a 3.25 to 1 maximum.
The filing highlights risks tied to U.S.-China trade tensions and export restrictions (including Huawei's addition to the Entity list), oil and gas industry cyclicality, dependence on U.S. Government contracts (about 24%d of 2019 net sales), and the Coronavirus outbreak, which the company said had led it to restrict travel to China. The company does not expect to pay cash dividends and has no share repurchases since 2015.
02—Key points
Key Highlights
- Net sales rose 9.0% to $3,163.6 million in 2019, with higher sales in each of the four segments.
- Net income increased 20.5% to $402.3 million, or $10.73 per diluted share, versus $9.01 in 2018.
- Operating income grew 18.0% to $491.7 million; cost of sales fell to 60.7% of net sales from 61.7%.
- Cash from operations was $482.1 million, and free cash flow was $393.7 million, up from $360.1 million in 2018.
- Acquisitions totaled $484.0 million in 2019, including the Roper scientific imaging businesses ($224.8 million) and the 3M gas and flame detection businesses ($233.5 million).
- Total debt was $851.8 million at year-end, with $598.3 million of available credit facility capacity; covenant ratios were well within requirements.
- Backlog of confirmed and funded orders was $1,699.3 million at December 29, 2019, up from $1,568.8 million a year earlier.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2019, Teledyne Technologies kept $0.13.
- Revenue$3.16B100.0%
- Cost of revenue−$1.92B60.7%
- Gross profit$1.24B39.3%
- Operating costs−$751.6M23.8%
- Operating income$491.7M15.5%
- Interest, other & tax−$89.4M2.8%
- Net income$402.3M12.7%
Where FY2019 revenue went
$3.16B- Cost of revenue: $1.92B, 61% of revenue
- SG&A: $715.1M, 23% of revenue
- Net income: $402.3M, 13% of revenue
- Other operating costs: $36.5M, 1.2% of revenue
- Interest, other & tax: $89.4M, 2.8% of revenue
Kept 13% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2019filed February 24, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $3.16B$2.90B | +9.0% |
| Cost of Revenue | $1.92B$1.79B | +7.2% |
| Gross Profit | $1.24B$1.11B | +11.9% |
| SG&A Expenses | $715.10M$694.20M | +3.0% |
| Operating Expenses | $2.67B$2.49B | +7.5% |
| Operating Income | $491.70M$416.60M | +18.0% |
| Interest Expense | $21.00M$29.20M | −28.1% |
| Net Income | $402.30M$333.80M | +20.5% |
| EPS (Basic) | $11.08$9.32 | +18.9% |
| EPS (Diluted) | $10.73$9.01 | +19.1% |
| Shares Outstanding (Basic) | 36.30M35.80M | +1.4% |
| Shares Outstanding (Diluted) | 37.50M37.00M | +1.4% |
05—Questions
Frequently Asked Questions
How did Teledyne perform financially in 2019?
Net sales were $3,163.6 million, up from $2,901.8 million in 2018. Net income was $402.3 million, or $10.73 per diluted share, compared with $333.8 million, or $9.01 per diluted share, in 2018. Operating income was $491.7 million versus $416.6 million the prior year.
What acquisitions did Teledyne make?
In 2019 Teledyne acquired the scientific imaging businesses of Roper Technologies, Inc. for $224.8 million, the gas and flame detection businesses of 3M Company for $233.5 million, and Micralyne Inc. for $25.7 million. In January 2020 it acquired OakGate Technology, Inc. for $28.0 million.
What are the main risks the filing identifies?
Key risks include escalating U.S.-China trade tensions and export restrictions, cyclical demand from the oil and gas industry, dependence on U.S. Government contracts (about 24% of 2019 net sales, with 64% of those contracts fixed-price), the economic effects of the Coronavirus outbreak, and Brexit-related uncertainty for U.K.-based businesses.
Does Teledyne pay dividends or repurchase shares?
The company does not anticipate paying cash dividends in the foreseeable future and intends to use earnings for growth and acquisitions. It may also deploy cash for share repurchases, but no repurchases were made in 2019, 2018 or 2017.
How much debt does Teledyne carry and is it in compliance with covenants?
Total outstanding indebtedness was $851.8 million at December 29, 2019. The company reported it was in compliance with its covenants, with a consolidated leverage ratio of 1.4 to 1 (maximum 3.25 to 1) and an interest coverage ratio of 22.6 to 1 (minimum 3.0 to 1).
06—Continue