Teledyne Technologies Incorporated (NYSE:TDY):
- Orders exceeded sales for the third consecutive
quarter
- Second quarter sales of $1,374.1 million
- Second quarter GAAP operating margin of 18.0% and second
quarter non-GAAP operating margin of 21.6%
- GAAP diluted earnings per share of $3.77 and second quarter
non-GAAP diluted earnings per share of $4.58
- All-time record cash from operations of $318.7 million and
free cash flow of $301.0 million
- Full year 2024 GAAP diluted earnings per share outlook of
$15.87 to $16.13 and affirming full year 2024 non-GAAP earnings per
share outlook of $19.25 to $19.45
- Debt maturity payment of $450 million
- Completed the acquisitions of Valeport and Adimec for
aggregate consideration of $123.6 million
- Capital deployment through July 2024 includes estimated
stock repurchases of approximately $278 million
- Quarter-end Consolidated Leverage Ratio of 1.7x
- Stock repurchases expected to continue under the current
$1.25 billion authorization
Teledyne today reported second quarter 2024 net sales of
$1,374.1 million, compared with net sales of $1,424.7 million for
the second quarter of 2023, a decrease of 3.6%. Net income
attributable to Teledyne was $180.2 million ($3.77 diluted earnings
per share) for the second quarter of 2024, compared with $185.3
million ($3.87 diluted earnings per share) for the second quarter
of 2023, a decrease of 2.8%. The second quarter of 2024 included
$49.1 million of pretax acquired intangible asset amortization
expense, $1.0 million of pretax FLIR integration costs and $0.2
million of FLIR acquisition-related discrete income tax expense.
Excluding these items, non-GAAP net income attributable to Teledyne
for the second quarter of 2024 was $218.7 million ($4.58 diluted
earnings per share). The second quarter of 2023 included $49.3
million of pretax acquired intangible asset amortization expense
and $0.4 million of FLIR acquisition-related discrete income tax
expense. Excluding these items, non-GAAP net income attributable to
Teledyne for the second quarter of 2023 was $223.7 million ($4.67
diluted earnings per share). Operating margin was 18.0% for the
both the second quarter of 2024 and the second quarter of 2023.
Excluding the non-GAAP items discussed above, non-GAAP operating
margin for the second quarter of 2024 was 21.6%, compared with
21.4% for the second quarter of 2023.
"In the second quarter, Teledyne achieved all-time record free
cash flow, allowing us to deploy approximately $852 million on debt
repayment, acquisitions and stock repurchases through July,” said
Robert Mehrabian, Executive Chairman. “Our earnings exceeded
expectations, orders were greater than sales for the third
consecutive quarter, and we ended the period with record backlog.
Therefore, we are reasonably confident that quarterly sales will
again increase sequentially, and we will return to year-over-year
growth in the second half of 2024."
Review of Operations
Comparisons are with the second quarter of 2023, unless noted
otherwise.
Digital Imaging
The Digital Imaging segment’s second quarter 2024 net sales were
$739.4 million, compared with $793.3 million, a decrease of 6.8%.
Operating income was $113.5 million for the second quarter of 2024,
compared with $124.6 million, a decrease of 8.9%. The second
quarter of 2024 included $1.0 million of pretax FLIR integration
costs, and there were no comparable costs in the second quarter of
2023. Acquired intangible amortization expense for the second
quarter of 2024 was $45.4 million compared with $45.6 million.
Excluding these items, non-GAAP operating income for the second
quarter of 2024 was $159.9 million, compared with $170.2 million, a
decrease of 6.1%.
The second quarter of 2024 net sales decreased primarily due to
lower sales of industrial automation imaging systems, X-ray
products and commercial infrared imaging systems, partially offset
by higher sales of infrared detectors and surveillance systems. The
decrease in operating income was primarily due to lower sales and
unfavorable product mix, including less industrial automation
imaging systems sales.
Instrumentation
The Instrumentation segment’s second quarter 2024 net sales were
$333.5 million, compared with $328.4 million, an increase of 1.6%.
Operating income was $87.2 million for the second quarter of 2024,
compared with $81.4 million, an increase of 7.1%.
The second quarter of 2024 net sales increase resulted from a
$20.4 million increase in sales of marine instrumentation primarily
due to stronger offshore energy and defense markets, partially
offset by a $13.5 million decrease in sales of electronic test and
measurement instrumentation as well as a $1.8 million decrease in
sales of environmental instrumentation. The increase in operating
income primarily reflected the impact of higher marine
instrumentation sales as well as favorable marine instrumentation
product mix.
Aerospace and Defense Electronics
The Aerospace and Defense Electronics segment’s second quarter
2024 net sales were $194.4 million, compared with $186.0 million,
an increase of 4.5%. Operating income was $57.1 million for the
second quarter of 2024, compared with $53.2 million, an increase of
7.3%.
The second quarter of 2024 net sales reflected higher sales of
$4.0 million for aerospace electronics and $4.4 million for defense
electronics. The increase in operating income primarily reflected
the impact of higher sales and improved product margins.
Engineered Systems
The Engineered Systems segment’s second quarter 2024 net sales
were $106.8 million, compared with $117.0 million, a decrease of
8.7%. Operating income was $7.5 million for the second quarter of
2024, compared with $11.5 million, a decrease of 34.8%.
The second quarter of 2024 net sales reflected lower sales of
$8.9 million for engineered products and lower sales of $1.3
million for energy systems. The lower sales for engineered products
primarily reflected decreased sales from missile defense and
maritime programs. The decrease in operating income was primarily
driven by lower sales and unfavorable program mix.
Additional Financial Information
Cash Flow
Cash provided by operating activities was $318.7 million for the
second quarter of 2024 compared with $190.5 million, with the
increase driven by stronger working capital conversion in the
second quarter of 2024. Depreciation and amortization expense for
the second quarter of 2024 was $77.8 million compared with $80.0
million. Stock-based compensation expense for the second quarter of
2024 was $9.3 million compared with $8.4 million.
Capital expenditures for the second quarter of 2024 were $17.7
million compared with $27.3 million. Teledyne received $2.4 million
from the exercise of stock options in the second quarter of 2024
compared with $4.8 million. During the second quarter of 2024, the
Company completed the acquisitions of Valeport and Adimec for
aggregate consideration of $123.6 million.
During the second quarter of 2024, the Company repurchased
approximately 0.5 million shares for $193.8 million.
As of June 30, 2024, net debt was $2,354.2 million which is
calculated as total debt of $2,797.4 million, net of cash and cash
equivalents of $443.2 million. As of December 31, 2023, net debt
was $2,596.6 million representing total debt of $3,244.9 million,
net of cash and cash equivalents of $648.3 million. During the
second quarter of 2024, the Company made a $450 million debt
maturity payment.
During the second quarter of 2024, the Company amended and
restated its credit facility which extended the maturity date to
June 2029 as well as increased the available borrowing capacity to
$1.20 billion. As of June 30, 2024, $1,177.7 million was available
under the $1.20 billion credit facility, after reductions of $22.3
million in outstanding letters of credit.
Second Quarter
Free Cash Flow
2024
2023
Cash provided by operating activities
$
318.7
$
190.5
Capital expenditures for property, plant
and equipment
(17.7
)
(27.3
)
Free cash flow
$
301.0
$
163.2
Income Taxes
The effective tax rate for the second quarter of 2024 was 22.2%,
compared with 21.0%. The second quarter of 2024 reflected net
discrete income tax benefits of $0.7 million compared with $1.4
million.
Other
Corporate expense was $18.3 million for the second quarter of
2024 compared with $14.6 million, with the increase driven
primarily by increased legal contingencies as well as higher
compensation costs. Non-service retirement benefit income was $2.7
million for the second quarter of 2024 compared with $2.9 million.
Interest expense, net of interest income, was $15.8 million for the
second quarter of 2024 compared with $22.3 million, with the
decrease due to reduced outstanding borrowings with lower weighted
average interest rates compared to the second quarter of 2023.
Outlook
Based on its current outlook, the company’s management believes
that third quarter 2024 GAAP diluted earnings per share will be in
the range of $4.02 to $4.16 and full year 2024 GAAP diluted
earnings per share will be in the range of $15.87 to $16.13. The
company’s management further believes that third quarter 2024
non-GAAP diluted earnings per share will be in the range of $4.90
to $5.00 and full year 2024 non-GAAP diluted earnings per share
will be in the range of $19.25 to $19.45. The non-GAAP outlook
excludes acquired intangible asset amortization for all
acquisitions, further FLIR integration costs and FLIR
acquisition-related tax matters.
Use of Non-GAAP Financial Measures
We report our financial results in accordance with generally
accepted accounting principles in the United States (“GAAP”). We
supplement the reporting of our financial results determined under
GAAP with certain non-GAAP financial measures. The non-GAAP
financial measures presented provides management, financial
analysts, and investors with additional useful information in
evaluating the performance of the company. The non-GAAP financial
measures should be considered in addition to, and not as a
substitute for, financial measures prepared in accordance with
GAAP. Further details on reasons that we use non-GAAP financial
measures, a reconciliation of these measures to the most directly
comparable GAAP measures, and other information relating to these
measures are included following our GAAP financial statements.
Forward-Looking Statements Cautionary Notice
This earnings release contains forward-looking statements, as
defined in the Private Securities Litigation Reform Act of 1995,
with respect to management’s beliefs about the financial condition,
results of operations, acquisitions and product synergies,
integration costs, tax matters and businesses of Teledyne in the
future. Forward-looking statements involve risks and uncertainties,
are based on the current expectations of the management of Teledyne
and are subject to uncertainty and changes in circumstances.
The forward-looking statements contained herein may include
statements relating to sales, sales growth, stock-based
compensation expense, tax rates, anticipated capital expenditures,
stock repurchases, product developments and other strategic
options. Forward-looking statements generally are accompanied by
words such as “projects”, “intends”, “expects”, “anticipates”,
“targets”, “estimates”, “will” and words of similar import that
convey the uncertainty of future events or outcomes. All statements
made in this communication that are not historical in nature should
be considered forward-looking. By its nature, forward-looking
information is not a guarantee of future performance or results and
involves risks and uncertainties because it relates to events and
depends on circumstances that will occur in the future.
Actual results could differ materially from these
forward-looking statements. Many factors could change anticipated
results, including: changes in relevant tax and other laws; foreign
currency exchange risks; rising interest rates; risks associated
with indebtedness, as well as our ability to reduce indebtedness
and the timing thereof; the impact of semiconductor and other
supply chain shortages; higher inflation, including wage
competition and higher shipping costs; labor shortages and
competition for skilled personnel; the inability to develop and
market new competitive products; inherent uncertainties involved in
the estimates and judgments used in the preparation of financial
statements and the providing of estimates of financial measures, in
accordance with U.S. GAAP and related standards; disruptions in the
global economy; the ongoing conflict in Israel and neighboring
regions, including related protests and the disruption to global
shipping routes; the ongoing conflict between Russia and Ukraine,
including the impact to energy prices and availability, especially
in Europe; customer and supplier bankruptcies; changes in demand
for products sold to the defense electronics, instrumentation,
digital imaging, energy exploration and production, commercial
aviation, semiconductor and communications markets; funding,
continuation and award of government programs; cuts to defense
spending resulting from existing and future deficit reduction
measures or changes to U.S. and foreign government spending and
budget priorities triggered by inflation, rising interest costs,
and economic conditions; impacts from the United Kingdom’s exit
from the European Union; uncertainties related to the 2024 U.S.
Presidential election; the imposition and expansion of, and
responses to, trade sanctions and tariffs; the continuing review
and resolution of FLIR’s trade compliance and tax matters;
escalating economic and diplomatic tension between China and the
United States; threats to the security of our confidential and
proprietary information, including cybersecurity threats; risks
related to artificial intelligence; natural and man-made disasters,
including those related to or intensified by climate change; and
our ability to achieve emission reduction targets and decrease our
carbon footprint. Lower oil and natural gas prices, as well as
instability in the Middle East or other oil producing regions, and
new regulations or restrictions relating to energy production,
including those implemented in response to climate change, could
further negatively affect our businesses that supply the oil and
gas industry. Weakness in the commercial aerospace industry
negatively affects the markets of our commercial aviation
businesses. Ongoing issues with Boeing’s 737 MAX product line could
result in manufacturing delays and lower sales of our products to
Boeing. In addition, financial market fluctuations affect the value
of the company’s pension assets. Changes in the policies of U.S.
and foreign governments, including economic sanctions, could
result, over time, in reductions or realignment in defense or other
government spending and further changes in programs in which the
company participates.
While the company’s growth strategy includes possible
acquisitions, we cannot provide any assurance as to when, if or on
what terms any acquisitions will be made. Acquisitions involve
various inherent risks, such as, among others, our ability to
integrate acquired businesses, retain key management and customers
and achieve identified financial and operating synergies. There are
additional risks associated with acquiring, owning and operating
businesses internationally, including those arising from U.S. and
foreign government policy changes or actions and exchange rate
fluctuations.
Additional factors that could cause results to differ materially
from those described above can be found in Teledyne’s Annual Report
on Form 10-K for the year ended December 31, 2023, as well as
subsequent Quarterly Reports on Form 10-Q and Current Reports on
Form 8-K, all of which are on file with the SEC and available in
the “Investors” section of Teledyne’s website, teledyne.com, under
the heading “Investor Information” and in other documents Teledyne
files with the SEC.
All forward-looking statements speak only as of the date they
are made and are based on information available at that time.
Teledyne assumes no obligation to update forward-looking statements
to reflect circumstances or events that occur after the date the
forward-looking statements were made or to reflect the occurrence
of unanticipated events except as required by federal securities
laws. As forward-looking statements involve significant risks and
uncertainties, caution should be exercised against placing undue
reliance on such statements.
A live webcast of Teledyne’s second quarter earnings conference
call will be held at 11:00 a.m. (Eastern) on Wednesday, July 24,
2024. To access the call, go to
www.teledyne.com/investors/events-and-presentations approximately
ten minutes before the scheduled start time. A replay will also be
available for one month starting at 12:00 p.m. (Eastern) on
Wednesday, July 24, 2024.
TELEDYNE TECHNOLOGIES
INCORPORATED
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
FOR THE SECOND QUARTER AND SIX
MONTHS ENDED
JUNE 30, 2024 AND JULY 2,
2023
(Unaudited - in millions, except
per share amounts)
Second Quarter
Second Quarter
Six Months
Six Months
2024
2023
2024
2023
Net sales
$
1,374.1
$
1,424.7
$
2,724.2
$
2,808.0
Costs and expenses:
Costs of sales
781.5
806.3
1,551.7
1,597.0
Selling, general and administrative
296.5
313.0
592.7
613.4
Acquired intangible asset amortization
49.1
49.3
98.5
99.0
Total costs and expenses
1,127.1
1,168.6
2,242.9
2,309.4
Operating income (loss)
247.0
256.1
481.3
498.6
Interest and debt income (expense),
net
(15.8
)
(22.3
)
(28.5
)
(43.3
)
Gain (loss) on debt extinguishment
—
1.6
—
1.6
Non-service retirement benefit income
(expense), net
2.7
2.9
5.4
6.2
Other income (expense), net
(2.2
)
(3.4
)
(1.0
)
(4.5
)
Income (loss) before income taxes
231.7
234.9
457.2
458.6
Provision (benefit) for income taxes
51.4
49.4
97.8
94.3
Net income (loss) including noncontrolling
interest
180.3
185.5
359.4
364.3
Less: Net income (loss) attributable to
noncontrolling interest
0.1
0.2
0.7
0.3
Net income (loss) attributable to
Teledyne
$
180.2
$
185.3
$
358.7
$
364.0
Diluted earnings per common share
$
3.77
$
3.87
$
7.49
$
7.60
Weighted average diluted common shares
outstanding
47.8
47.9
47.9
47.9
This condensed consolidated financial statement was prepared in
accordance with U.S. GAAP.
TELEDYNE TECHNOLOGIES
INCORPORATED
SUMMARY OF SEGMENT NET SALES
AND OPERATING INCOME
FOR THE SECOND QUARTER AND SIX
MONTHS ENDED
JUNE 30, 2024 AND JULY 2,
2023
(Unaudited - $ in millions)
Second Quarter
Second Quarter
% Change
Six Months
Six Months
% Change
2024
2023
2024
2023
Net sales:
Digital Imaging
$
739.4
$
793.3
(6.8
)%
$
1,480.2
$
1,565.8
(5.5
)%
Instrumentation
333.5
328.4
1.6
%
663.9
661.9
0.3
%
Aerospace and Defense Electronics
194.4
186.0
4.5
%
380.1
359.2
5.8
%
Engineered Systems
106.8
117.0
(8.7
)%
200.0
221.1
(9.5
)%
Total net sales
$
1,374.1
$
1,424.7
(3.6
)%
$
2,724.2
$
2,808.0
(3.0
)%
Operating income (loss):
Digital Imaging
$
113.5
$
124.6
(8.9
)%
$
227.3
$
246.8
(7.9
)%
Instrumentation
87.2
81.4
7.1
%
173.2
162.1
6.8
%
Aerospace and Defense Electronics
57.1
53.2
7.3
%
109.0
100.2
8.8
%
Engineered Systems
7.5
11.5
(34.8
)%
10.2
21.5
(52.6
)%
Corporate expense
(18.3
)
(14.6
)
25.3
%
(38.4
)
(32.0
)
20.0
%
Operating income (loss)
247.0
256.1
(3.6
)%
481.3
498.6
(3.5
)%
Interest and debt income (expense),
net
(15.8
)
(22.3
)
(29.1
)%
(28.5
)
(43.3
)
(34.2
)%
Gain (loss) on debt extinguishment
—
1.6
(100.0
)%
—
1.6
(100.0
)%
Non-service retirement benefit income
(expense), net
2.7
2.9
(6.9
)%
5.4
6.2
(12.9
)%
Other income (expense), net
(2.2
)
(3.4
)
(35.3
)%
(1.0
)
(4.5
)
(77.8
)%
Income (loss) before income taxes
231.7
234.9
(1.4
)%
457.2
458.6
(0.3
)%
Provision (benefit) for income taxes
51.4
49.4
4.0
%
97.8
94.3
3.7
%
Net income (loss) including noncontrolling
interest
180.3
185.5
(2.8
)%
359.4
364.3
(1.3
)%
Less: Net income (loss) attributable to
noncontrolling interest
0.1
0.2
(50.0
)%
0.7
0.3
133.3
%
Net income (loss) attributable to
Teledyne
$
180.2
$
185.3
(2.8
)%
$
358.7
$
364.0
(1.5
)%
This condensed consolidated financial statement was prepared in
accordance with U.S. GAAP.
TELEDYNE TECHNOLOGIES
INCORPORATED
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited – in millions)
June 30, 2024
December 31, 2023
ASSETS
Cash and cash equivalents
$
443.2
$
648.3
Accounts receivable and unbilled
receivables, net
1,161.5
1,202.1
Inventories, net
965.7
917.7
Prepaid expenses and other current
assets
174.3
213.3
Total current assets
2,744.7
2,981.4
Property, plant and equipment, net
755.6
777.0
Goodwill and acquired intangible assets,
net
10,223.1
10,280.9
Prepaid pension assets
211.5
203.3
Other assets, net
286.2
285.3
Total assets
$
14,221.1
$
14,527.9
LIABILITIES AND EQUITY
Accounts payable
$
399.7
$
384.7
Accrued liabilities
836.8
781.3
Current portion of long-term debt
150.5
600.1
Total current liabilities
1,387.0
1,766.1
Long-term debt, net of current portion
2,646.9
2,644.8
Other long-term liabilities
862.3
891.2
Total liabilities
4,896.2
5,302.1
Redeemable noncontrolling interest
5.2
4.6
Total stockholders’ equity
9,319.7
9,221.2
Total liabilities and equity
$
14,221.1
$
14,527.9
This condensed consolidated financial statement was prepared in
accordance with U.S. GAAP.
TELEDYNE TECHNOLOGIES
INCORPORATED
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES
FOR THE SECOND QUARTER AND SIX
MONTHS ENDED
JUNE 30, 2024 AND JULY 2,
2023
(Unaudited - in millions, except
per share amounts)
Second Quarter 2024
Second Quarter 2023
Income (loss) before income
taxes
Net (loss) income attributable
to Teledyne
Diluted earnings per common
share
Income (loss) before income
taxes
Net (loss) income attributable
to Teledyne
Diluted earnings per common
share
GAAP
$
231.7
$
180.2
$
3.77
$
234.9
$
185.3
$
3.87
Adjusted for specified items:
FLIR integration costs
1.0
0.8
0.02
—
—
—
Acquired intangible asset amortization
49.1
37.5
0.78
49.3
38.0
0.79
FLIR acquisition-related tax matters
—
0.2
0.01
—
0.4
0.01
Non-GAAP
$
281.8
$
218.7
$
4.58
$
284.2
$
223.7
$
4.67
Six Months 2024
Six Months 2023
Income (loss) before income
taxes
Net (loss) income attributable
to Teledyne
Diluted earnings per common
share
Income (loss) before income
taxes
Net (loss) income attributable
to Teledyne
Diluted earnings per common
share
GAAP
$
457.2
$
358.7
$
7.49
$
458.6
$
364.0
$
7.60
Adjusted for specified items:
FLIR integration costs
3.2
2.5
0.05
—
—
—
Acquired intangible asset amortization
98.5
75.3
1.57
99.0
76.2
1.58
FLIR acquisition-related tax matters
—
0.5
0.01
—
0.7
0.02
Non-GAAP
$
558.9
$
437.0
$
9.12
$
557.6
$
440.9
$
9.20
Second Quarter 2024
Second Quarter 2023
Operating income
(loss)
Operating margin
Operating income
(loss)
Operating margin
GAAP
$
247.0
18.0
%
$
256.1
18.0
%
Adjusted for specified items:
FLIR integration costs
1.0
—
Acquired intangible asset amortization
49.1
49.3
Non-GAAP
$
297.1
21.6
%
$
305.4
21.4
%
Six Months 2024
Six Months 2023
Operating income
(loss)
Operating margin
Operating income
(loss)
Operating margin
GAAP
$
481.3
17.7
%
$
498.6
17.8
%
Adjusted for specified items:
FLIR integration costs
3.2
—
Acquired intangible asset amortization
98.5
99.0
Non-GAAP
$
583.0
21.4
%
$
597.6
21.3
%
TELEDYNE TECHNOLOGIES
INCORPORATED
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES
(Unaudited - in
millions)
Second Quarter 2024
GAAP Operating Income
(loss)
Acquired intangible asset
amortization
FLIR integration costs
Non-GAAP Operating Income
(loss)
Digital Imaging
$
113.5
$
45.4
$
1.0
$
159.9
Instrumentation
87.2
3.5
—
90.7
Aerospace and Defense Electronics
57.1
0.2
—
57.3
Engineered Systems
7.5
—
—
7.5
Corporate expense
(18.3
)
—
—
(18.3
)
Total
$
247.0
$
49.1
$
1.0
$
297.1
Second Quarter 2023
GAAP Operating Income
(loss)
Acquired intangible asset
amortization
FLIR integration costs
Non-GAAP Operating Income
(loss)
Digital Imaging
$
124.6
$
45.6
$
—
$
170.2
Instrumentation
81.4
3.5
—
84.9
Aerospace and Defense Electronics
53.2
0.2
—
53.4
Engineered Systems
11.5
—
—
11.5
Corporate expense
(14.6
)
—
—
(14.6
)
Total
$
256.1
$
49.3
$
—
$
305.4
Six Months 2024
GAAP Operating Income
(loss)
Acquired intangible asset
amortization
FLIR integration costs
Non-GAAP Operating Income
(loss)
Digital Imaging
$
227.3
$
91.2
$
3.2
$
321.7
Instrumentation
173.2
6.9
—
180.1
Aerospace and Defense Electronics
109.0
0.4
—
109.4
Engineered Systems
10.2
—
—
10.2
Corporate expense
(38.4
)
—
—
(38.4
)
Total
$
481.3
$
98.5
$
3.2
$
583.0
Six Months 2023
GAAP Operating Income
(loss)
Acquired intangible asset
amortization
FLIR integration costs
Non-GAAP Operating Income
(loss)
Digital Imaging
$
246.8
$
91.4
$
—
$
338.2
Instrumentation
162.1
7.2
—
169.3
Aerospace and Defense Electronics
100.2
0.4
—
100.6
Engineered Systems
21.5
—
—
21.5
Corporate expense
(32.0
)
—
—
(32.0
)
Total
$
498.6
$
99.0
$
—
$
597.6
TELEDYNE TECHNOLOGIES
INCORPORATED
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES
(Unaudited - in millions)
June 30, 2024
December 31, 2023
Current portion of long-term debt
$
150.5
$
600.1
Long-term debt
2,646.9
2,644.8
Total debt - non-GAAP
2,797.4
3,244.9
Less cash and cash equivalents
(443.2
)
(648.3
)
Net debt - non-GAAP
$
2,354.2
$
2,596.6
Third Quarter 2024
Twelve Months 2024
Low
High
Low
High
GAAP Diluted Earnings Per Common Share
Outlook
$
4.02
$
4.16
$
15.87
$
16.13
Adjusted for specified items:
FLIR integration costs
0.06
0.04
0.16
0.14
Acquired intangible asset amortization
0.82
0.80
3.22
3.18
Non-GAAP Diluted Earnings Per Common
Share Outlook
$
4.90
$
5.00
$
19.25
$
19.45
Explanation of Non-GAAP Financial Measures
We report our financial results in accordance with GAAP.
However, management believes that, in order to more fully
understand our short-term and long-term financial and operational
trends, and to aid in comparability with our competitors, investors
and financial analysts may wish to consider the impact of certain
items resulting from our acquisitions which have an infrequent or
non-recurring impact on operations or assist in understanding our
operations pre-acquisition. Accordingly, we present non-GAAP
financial measures as a supplement to the financial measures we
present in accordance with GAAP. These non-GAAP financial measures
provide management, investors and financial analysts with
additional means to understand and evaluate the operating results
and trends in our ongoing business by adjusting for certain
expenses and benefits. Management believes these non-GAAP financial
measures also provide additional means of evaluating
period-over-period operating performance. In addition, management
understands that some investors and financial analysts find this
information helpful in analyzing our financial and operational
performance and comparing this performance to our peers and
competitors. The company’s diluted earnings per common share
outlook guidance is also presented on a non-GAAP basis.
The non-GAAP financial measures are not meant to be considered
superior to, or a substitute for, our financial statements prepared
in accordance with GAAP. There are material limitations associated
with non-GAAP financial measures because they exclude charges that
have an effect on our reported results and, therefore, should not
be relied upon as the sole financial measures by which to evaluate
our financial results. Management compensates and believes that
investors should compensate for these limitations by viewing the
non-GAAP financial measures in conjunction with the GAAP financial
measures. In addition, the non-GAAP financial measures included in
this earnings announcement may be different from, and therefore may
not be comparable to, similar measures used by other companies. The
non-GAAP financial measures are also used by our management to
evaluate our operating performance and benchmark our results
against our historical performance and the performance of our
peers.
Our non-GAAP measures are as follows:
Non-GAAP income before income taxes, net income and diluted
earnings per common share
These non-GAAP measures provided a supplemental view of income
before taxes, net income, and diluted earnings per common share.
These non-GAAP measures exclude certain FLIR acquisition
integration-related costs, acquired intangible asset amortization,
the remeasurement of deferred taxes related to acquired intangible
assets due to changes in tax laws, and the tax benefits or costs
related to the settlement or other resolution of the FLIR tax
reserves. We also adjust for any post-acquisition interest on
certain income tax reserves related to FLIR. We adjust for any
income tax impact related to these items to take into account the
tax treatment and related tax rate and changes in tax rates that
apply to each adjustment in the applicable tax jurisdiction.
Generally, this results in the tax impact at the U.S. marginal tax
rate for certain adjustments, including the majority of
amortization of intangible assets, whereas the tax impact of other
adjustments, including transaction expenses, depend on whether the
amounts are deductible in the respective tax jurisdictions and the
applicable tax rates in those jurisdictions. We believe these
measures provide investors and management with additional means to
understand and evaluate the operating results of our business by
adjusting for certain expenses and benefits and present an
alternative view of our performance compared to prior periods.
Non-GAAP operating income and operating margin
We define non-GAAP operating margin as non-GAAP operating income
divided by net sales. These non-GAAP measures exclude certain FLIR
acquisition integration-related costs and acquired intangible asset
amortization. We believe these measures provide investors and
management with additional means to understand and evaluate the
operating results of our business by adjusting for certain expenses
and other items and present an alternative view of our performance
compared to prior periods.
Non-GAAP total debt and net debt
We define non-GAAP total debt as the sum of current portion of
long-term debt and other debt and long-term debt. We define net
debt as the difference between non-GAAP total debt less cash and
cash equivalents. The company believes that this non-GAAP
information is useful to assist investors and management in
analyzing the company’s liquidity.
Non-GAAP diluted earnings per common share outlook
These non-GAAP measures represent our earnings per common share
outlook for the third quarter of 2024 and total year 2024 on a
fully diluted basis, excluding certain FLIR integration costs,
acquired intangible asset amortization for all acquisitions and
FLIR acquisition-related tax matters.
Non-GAAP cash provided by operations and free cash
flow
We define free cash flow as cash provided by operating
activities (a measure prescribed by GAAP) less capital expenditures
for property, plant and equipment. We believe that this non-GAAP
information is useful to assist management and the investment
community in analyzing the company’s ability to generate cash
flow.
Non-GAAP line items used in tables
Management excludes the effect of each of the acquisition
related items identified below to arrive at the applicable non-GAAP
financial measure referenced in the tables for the reasons set
forth below with respect to that item:
- Acquired intangible asset
amortization – We believe that excluding the amortization of
acquired intangible assets, which primarily represents purchased
technology and customer relationships, as well as purchase order
and contract backlog, provides an alternative way for investors to
compare our operations pre-acquisition to those post-acquisition
and to those of our competitors that have pursued internal growth
strategies. However, we note that companies that grow internally
will incur costs to develop intangible assets that will be expensed
in the period incurred, which may make a direct comparison more
difficult.
- FLIR integration costs – Included
in our GAAP presentation of cost of sales and selling, general and
administrative expenses are expenses (or benefits) incurred in
connection with further integration-related costs related to the
FLIR acquisition such as facility consolidation costs, facility
lease impairments and employee separation costs. We exclude these
costs from our non-GAAP measures because we believe it does not
reflect our ongoing financial performance.
- FLIR acquisition-related tax
matters – Included in our tax provision is post-acquisition
interest on certain income tax reserves related to FLIR, as well as
the tax benefits or costs related to the settlement or other
resolution of the FLIR tax reserves. We exclude these impacts from
our non-GAAP measures because we believe it does not reflect our
ongoing financial performance.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240724461449/en/
Jason VanWees (805) 373-4542
Teledyne Technologies (NYSE:TDY)
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