01—Abstract
Summary
Summary of the 10-Q filed July 29, 2024. Cited figures are marked; the original filing is the authoritative source.
Teledyne Technologies Incorporated (TDY) reported second-quarter 2024 net sales of $1,374.1 milliona, down 3.6% from $1,424.7 million in the second quarter of 2023.
Net income attributable to Teledyne was $180.2 millionb, down 2.8%, and diluted earnings per share were $3.77 versus $3.87. For the first six months, net sales were $2,724.2 million (down 3.0%), operating income was $481.3 million (down 3.5%), and diluted EPS was $7.49 versus $7.60. Management stated that industrial automation and electronic test and measurement markets weakened more than planned in the first half of the year.
Digital Imaging, the largest segment, saw net sales fall 6.8% in the quarter, while Aerospace and Defense Electronics grew 4.5% and Instrumentation grew 1.6%. Cash flow and balance sheet activity were significant in the period. Net cash provided by operating activities rose to $609.7 millionc for the first six months, compared with $393.5 million a year earlier, driven by stronger working capital conversion.
Total debt fell to $2,797.4 milliond from $3,244.9 million at year-end 2023, reflecting a $450 million repayment of 0.95% senior notes due April 2024. Cash and cash equivalents declined to $443.2 million from $648.3 million. The company repurchased approximately 0.5 million shares for $193.8 million during the quarter under a new $1.25 billion authorization approved in April 2024, and made two acquisitions in the first half, Adimec and Valeport, for $123.6 million in aggregate net consideration.
The filing also discloses open trade compliance matters. Teledyne has made voluntary disclosures to U.S. and non-U.S. export authorities related to Teledyne FLIR shipments, and management states it cannot reasonably estimate the time to resolve these matters or the potential loss, though an unfavorable outcome could be material. Goodwill for the FLIR reporting unit was $5,850.8 million at June 30, 2024, and the filing notes that the FLIR reporting unit's estimated fair value exceeded its carrying value by approximately 6% at the fourth-quarter 2023 assessment.
02—Key points
Key Highlights
- Second-quarter 2024 net sales were $1,374.1 million, down 3.6% from $1,424.7 million, with decreases in Digital Imaging (down 6.8%) and Engineered Systems (down 8.7%) partly offset by growth in Aerospace and Defense Electronics (up 4.5%) and Instrumentation (up 1.6%).
- Diluted earnings per share were $3.77 for the second quarter of 2024 versus $3.87 a year earlier; for the first six months, diluted EPS was $7.49 versus $7.60.
- Operating cash flow for the first six months of 2024 was $609.7 million, up from $393.5 million, driven by stronger working capital conversion.
- Total debt was reduced to $2,797.4 million from $3,244.9 million at December 31, 2023, after a $450 million repayment of senior notes due April 2024.
- A new $1.25 billion share repurchase program was authorized in April 2024; the company repurchased $193.8 million of stock in the second quarter and $84.5 million in shares after quarter-end.
- Two acquisitions were completed in 2024: Adimec for $88.1 million and Valeport for $35.5 million, both net of cash acquired.
- Management cited weaker-than-planned first-half sales in industrial automation and electronic test and measurement markets, and noted that trade compliance voluntary disclosures involving Teledyne FLIR could result in material fines or penalties.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2024, Teledyne Technologies kept $0.13.
- Revenue$1.37B100.0%
- Cost of revenue−$781.5M56.9%
- Gross profit$592.6M43.1%
- Operating costs−$345.6M25.2%
- Operating income$247.0M18.0%
- Interest, other & tax−$66.8M4.9%
- Net income$180.2M13.1%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2024filed July 29, 2024Financial Statements
Q2 FY2024 against Q2 FY2023
| Line item | Q2 FY2024Q2 FY2023 | Change |
|---|---|---|
| Revenue | $1.37B$1.38B | −0.7% |
| Cost of Revenue | $781.50M$790.70M | −1.2% |
| Gross Profit | $592.60M$592.60M | 0.0% |
| R&D Expenses | $71.70M— | — |
| SG&A Expenses | $224.80M$300.40M | −25.2% |
| Operating Expenses | $1.13B$1.14B | −1.2% |
| Operating Income | $247.00M$242.50M | +1.9% |
| Net Income | $180.20M$178.70M | +0.8% |
| EPS (Basic) | $3.82$3.81 | +0.3% |
| EPS (Diluted) | $3.77$3.73 | +1.1% |
| Shares Outstanding (Basic) | 47.20M46.90M | +0.6% |
| Shares Outstanding (Diluted) | 47.80M47.90M | −0.2% |
05—Questions
Frequently Asked Questions
How did Teledyne perform in the second quarter of 2024?
Net sales were $1,374.1 million, down 3.6% from $1,424.7 million in the second quarter of 2023. Operating income was $247.0 million versus $256.1 million, and net income attributable to Teledyne was $180.2 million versus $185.3 million, a decline of 2.8%.
Which segments drove the sales change?
Digital Imaging net sales fell 6.8% to $739.4 million, mainly due to lower industrial automation imaging systems, X-ray products and commercial infrared imaging systems. Engineered Systems fell 8.7% to $106.8 million. Aerospace and Defense Electronics rose 4.5% to $194.4 million, and Instrumentation rose 1.6% to $333.5 million, led by Marine Instrumentation.
How much cash and debt does Teledyne have, and how has it changed?
Cash and cash equivalents were $443.2 million at June 30, 2024, down from $648.3 million at December 31, 2023. Total debt was $2,797.4 million, down from $3,244.9 million, after the $450 million repayment of senior notes due April 2024. The company had $1,177.7 million available under its $1.20 billion credit facility after letters of credit.
What are the main legal or regulatory risks disclosed?
Teledyne has made voluntary disclosures to U.S. and non-U.S. export authorities concerning Teledyne FLIR shipments that were not licensed due to an incorrect de minimis calculation methodology. Management says it cannot reasonably estimate the timing or amount of potential penalties, and an unfavorable outcome could include substantial fines or loss of export privileges that could be material.
What did management say about the outlook for supply chains and costs?
Management said it has experienced supply chain challenges, including long lead times, and cost inflation for parts, components, logistics and labor. It expects cost inflation and supply chain constraints to continue during the remainder of 2024, though to a lesser extent than in recent years. It also planned about $100 million of capital expenditures for 2024.
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