01—Abstract
Summary
Summary of the 10-K filed February 25, 2022. Cited figures are marked; the original filing is the authoritative source.
Teledyne Technologies Incorporated (TDY) reported fiscal 2021 net sales of $4,614.3 milliona, up 49.5% from $3,086.2 million in 2020, driven largely by its May 14, 2021 acquisition of FLIR Systems, Inc. The FLIR acquisition, valued at approximately $8.1 billion (net cash payments of $3.7 billion, $3.9 billion in Teledyne share issuances, and $0.5 billion of assumed FLIR debt), contributed $1,273.6 million of incremental net sales.
Net income rose 10.8% to $445.3 millionb, or $10.05 per diluted share, compared with $10.62 per diluted share in 2020. Operating income increased 30.0% to $624.3 million, though results absorbed $350.3 million in pretax FLIR-related expenses, including $110.3 million of intangible amortization and $106.4 million of acquired inventory step-up expense. The balance sheet and cash flow profile changed significantly.
Total assets grew to $14,430.3 millionc from $5,084.8 million, goodwill rose to $7,986.7 million, and total long-term debt reached $4,099.4 million, up from $680.9 million. Net cash provided by operating activities was $824.6 million and free cash flow was $723.0 million. Management stated it does not plan to pay cash dividends and will use earnings for growth and acquisitions.
Teledyne also disclosed a Swedish tax matter in which it paid $296.4 milliond on February 2, 2022, following a January 26, 2022 appellate ruling, and FLIR export-control matters that remain unresolved. The Digital Imaging segment now represents 52% of net sales, up from 32% in 2020, which increases concentration in that segment. Investors should weigh the higher leverage, acquisition integration risk, supply chain constraints and inflation expected to persist into 2022, and the ongoing FLIR export and tax matters against the scale and profitability the acquisition adds.
02—Key points
Key Highlights
- Net sales rose 49.5% to $4,614.3 million in 2021, with Digital Imaging sales up 144.7% to $2,412.9 million, largely from the FLIR acquisition.
- Net income increased 10.8% to $445.3 million, or $10.05 per diluted share, versus $10.62 per diluted share in 2020.
- Operating income grew 30.0% to $624.3 million, despite $350.3 million in pretax FLIR acquisition-related expenses.
- The FLIR acquisition on May 14, 2021 was valued at approximately $8.1 billion and added $1,273.6 million of incremental net sales in 2021.
- Total long-term debt increased to $4,099.4 million from $680.9 million, and goodwill rose to $7,986.7 million.
- Free cash flow was $723.0 million, compared with $547.5 million in 2020, on operating cash flow of $824.6 million.
- A Swedish tax liability of $296.4 million was paid on February 2, 2022, and FLIR export-control matters remain open.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2022, Teledyne Technologies kept $0.10.
- Revenue$4.61B100.0%
- Cost of revenue−$2.77B60.1%
- Gross profit$1.84B39.9%
- Operating costs−$1.22B26.4%
- Operating income$624.3M13.5%
- Interest, other & tax−$179.0M3.9%
- Net income$445.3M9.7%
Where FY2022 revenue went
$4.61B- Cost of revenue: $2.77B, 60% of revenue
- SG&A: $1.07B, 23% of revenue
- Net income: $445.3M, 9.7% of revenue
- Other operating costs: $149.3M, 3.2% of revenue
- Interest, other & tax: $179.0M, 3.9% of revenue
Kept 9.7% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 25, 2022Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $4.61B$3.09B | +49.5% |
| Cost of Revenue | $2.77B$1.91B | +45.5% |
| Gross Profit | $1.84B$1.18B | +55.9% |
| SG&A Expenses | $1.07B$662.00M | +61.3% |
| Operating Expenses | $3.99B$2.61B | +53.1% |
| Operating Income | $624.30M$480.10M | +30.0% |
| Interest Expense | $90.80M$15.30M | +493.5% |
| Net Income | $445.30M$401.90M | +10.8% |
| EPS (Basic) | $10.31$10.95 | −5.8% |
| EPS (Diluted) | $10.05$10.62 | −5.4% |
| Shares Outstanding (Basic) | 43.20M36.70M | +17.7% |
| Shares Outstanding (Diluted) | 44.30M37.90M | +16.9% |
05—Questions
Frequently Asked Questions
What drove the large increase in Teledyne's 2021 net sales and how much came from FLIR?
Net sales increased to $4,614.3 million from $3,086.2 million, a 49.5% increase. Total 2021 net sales included $1,273.6 million of incremental net sales from the FLIR acquisition completed on May 14, 2021, which is part of the Digital Imaging segment. Digital Imaging net sales rose 144.7% to $2,412.9 million.
How did the FLIR acquisition affect Teledyne's profitability and balance sheet?
The company incurred $350.3 million in pretax FLIR-related expenses in 2021, including $110.3 million of acquired intangible asset amortization, $106.4 million of acquired inventory step-up expense, $103.0 million of transaction and integration costs, and $30.6 million of bridge loan and debt extinguishment fees. Long-term debt rose to $4,099.4 million from $680.9 million, and goodwill increased to $7,986.7 million.
Does Teledyne pay dividends, and how is it using its cash?
Teledyne stated it does not anticipate paying cash dividends in the foreseeable future and intends to use future earnings to fund the development and growth of its businesses, including potential acquisitions. Free cash flow was $723.0 million in 2021. The company also had $474.7 million in cash and cash equivalents at January 2, 2022.
What are the main risks flagged in the filing related to FLIR and taxes?
FLIR has a 2018 Consent Agreement with the U.S. Department of State with a $30.0 million civil penalty ($15.0 million suspended), and other voluntary disclosures to the Department of Commerce remain open with potential fines that cannot yet be estimated. Teledyne paid $296.4 million on February 2, 2022 for a Swedish tax matter, and $177.5 million of other provisional uncertain tax position accruals for FLIR were preliminarily recorded.
What do the filing's disclosures say about supply chain and cost pressures heading into 2022?
Teledyne reported component and raw material shortages that limited its ability to manufacture and ship all product for which it had demand, and expects these delays and shortages to continue in 2022. It also expects inflationary pressures to persist, and cost of sales as a percentage of net sales was 60.1% in 2021 compared with 61.7% in 2020.
06—Continue