Teledyne Technologies Incorporated (TDY) Q2 2023 Earnings Call Transcript

For the period ending July 2, 2023

July 26, 2023 11:00 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, good morning. Thank you for standing by today's conference assembled [ph]. Welcome to the Teledyne Technologies Second Quarter Earnings Call. [Operator Instructions]

At this time, it's my pleasure to turn the conference over to our host, Jason VanWees. Please go ahead.

Jason VanWees

Thank you, Dom. This is Jason VanWees, Vice Chairman. I'd like to welcome everyone to Teledyne's second quarter 2023 earnings release conference call. We released our earnings earlier this morning before the market opened. Joining me today are Teledyne's Chairman, President and CEO, Robert Mehrabian; Senior Vice President and CFO, Sue Main; and Senior Vice President and General Counsel, Chief Compliance Officer and Secretary, Melanie Cibik. Also joining is Edwin Roks, Executive VP. After remarks by Robert and Sue, we will ask for your questions.

Of course, though, before we get started, our attorneys have reminded me to tell you that all forward-looking statements made this morning are subject to various assumptions, risks and caveats as noted in our earnings release and our periodic SEC filings. Actual results may differ materially. In order to avoid potential selective disclosures, this call is simultaneously being webcast and a replay, both via webcast and dial-in, will be available for approximately one month.

Here is Robert.

Robert Mehrabian

Thank you, Jason and thank you for joining our earnings call. In the second quarter, we achieved all-time record quarterly sales, with overall sales increasing 5.1%. Furthermore, sales as well as GAAP and non-GAAP operating profit and operating margin increased year-over-year in every segment. For the total company, GAAP and non-GAAP operating margins increased 105 and 73 basis points, respectively. Excluding foreign currency headwind, which negatively impacted second quarter sales growth by approximately 40 basis points, growth in local currency would have been 5.5%.

GAAP operating margin of 18% was a second quarter record and non-GAAP operating margin was 21.4%. Second quarter GAAP earnings per share were $3.87 and non-GAAP earnings of $4.67 were also second quarter records. And finally, including continued debt repayment through July, which totaled about $620 million year-to-date, our consolidated leverage ratio declined to 2.1x. I'll now comment a bit further on the performance of Teledyne flare and the announced cost reductions and the outlook for the balance of the year.

In the 2 years, since we've owned FLIR, we've resolved the most significant legacy tax matters, exited the consent agreement with the Department of State, consolidated leadership in marketing and operations for the FLIR Defense portfolio and corrected some historical product quality issues. As part of this effort, we also took a much more focused view of the Defense business, aggressively pursuing those opportunities where we have truly differentiated technology. I am pleased to report that the order book and backlog of FLIR, specialty FLIR Defense, significantly inflected during the second quarter. For reference, the commercial business across digital imaging, both DALSA to FLIR grew organically in the second quarter. While FLIR Defense sales declined year-over-year, nearly all of this was lower revenue in unmanned ground systems as we achieved the milestone of shipping our 1,000th man transportable robotic system increment to, to the U.S. Army.