Teledyne Technologies Reports Third Quarter Results

THOUSAND OAKS, Calif. — (BUSINESS WIRE) — November 3, 2016 — Teledyne Technologies Incorporated (NYSE: TDY):

  • Third quarter sales from continuing operations of $526.8 million
  • Record third quarter GAAP earnings per diluted share from continuing operations of $1.49
  • Record third quarter cash from operations of $98.9 million
  • Record GAAP operating margin
  • Raising full year 2016 GAAP earnings outlook from continuing operations to $5.26 to $5.31, an increase from the prior outlook of $5.10 to $5.20

Teledyne today reported third quarter 2016 sales from continuing operations of $526.8 million, compared with sales from continuing operations of $551.7 million for the third quarter of 2015, a decrease of 4.5%. Net income from continuing operations was $53.1 million ($1.49 per diluted share) for the third quarter of 2016, compared with $49.8 million ($1.38 per diluted share) for the third quarter of 2015, an increase of 6.6%. The third quarter of 2016 included pretax severance, facility consolidation and assets impairment charges of $1.8 million offset by net discrete tax benefits of $6.6 million. The third quarter of 2015 included pretax severance charges of $3.1 million offset by net discrete tax benefits of $7.4 million. Net income attributable to Teledyne was $52.0 million ($1.46 per diluted share) for the third quarter of 2016, compared with $48.3 million ($1.34 per diluted share) for the third quarter of 2015, an increase of 7.7%.

“In the third quarter, we continued to achieve organic growth in our commercial imaging and aerospace businesses. Sales of electronic test and measurement instrumentation also increased nicely,” said Robert Mehrabian, Chairman, President and Chief Executive Officer. “I am very pleased with our execution across Teledyne, especially given the generally weaker capital spending environment. Our earnings and cash from operations were at record levels for any third quarter. Furthermore, Teledyne’s GAAP operating margin was an all-time record. Despite continued weakness in energy markets and while we remain cautious, we also believe that our marine instrumentation businesses, collectively, have bottomed. Finally, given our resilient business portfolio and strong balance sheet, we are committed to ongoing investment in research and development, as well as disciplined acquisitions.”

Review of Operations (Comparisons are with the third quarter of 2015, unless noted otherwise.) The results reflect the classification of our Printed Circuit Technology (“PCT”) business as a discontinued operation which was sold in the third quarter on July 8, 2016, for $9.3 million in cash. The Printed Circuit Technology business was previously reported as part of the Aerospace and Defense Electronics segment.

Instrumentation

The Instrumentation segment’s third quarter 2016 sales were $208.3 million, compared with $243.2 million, a decrease of 14.4%. Third quarter 2016 operating income was $28.1 million, compared with $38.6 million, a decrease of 27.2%.

The third quarter 2016 sales decrease primarily resulted from lower sales of marine and environmental instrumentation partially offset by increased sales of test and measurement instrumentation. Sales for marine instrumentation decreased $38.9 million and primarily reflected lower sales of interconnect systems and other marine sensors for energy exploration and production, partially offset by higher sales of interconnects and marine systems for U.S. Government applications. Sales of test and measurement instrumentation increased $7.6 million and included $4.7 million in incremental sales from recent acquisitions. Sales of environmental instrumentation decreased $3.6 million. The decrease in operating income is primarily due to the impact of lower sales and lower margins for marine instrumentation.

Digital Imaging

The Digital Imaging segment’s third quarter 2016 sales were $98.5 million, compared with $95.7 million, an increase of 2.9%. Operating income was $11.7 million for the third quarter of 2016, compared with $10.4 million, an increase of 12.5%.

The third quarter 2016 sales primarily reflected higher sales of machine vision cameras for semiconductor and industrial applications, micro electro-mechanical systems (“MEMS”) and geospatial software. The third quarter 2016 sales included $3.0 million in incremental sales from a recent acquisition. The increase in operating income in the third quarter of 2016 primarily reflected the impact of higher sales, favorable product mix and $1.2 million in lower severance and facility consolidation costs, compared with the third quarter of 2015.

Aerospace and Defense Electronics

The Aerospace and Defense Electronics segment’s third quarter 2016 sales were $153.5 million, compared with $147.6 million, an increase of 4.0%. Operating income was $33.2 million for the third quarter of 2016, compared with $25.8 million, an increase of 28.7%.

The third quarter 2016 sales reflected $10.2 million of higher sales of avionics products and electronic relays, partially offset by $2.7 million of lower sales of microwave and interconnect systems and $1.6 million of lower sales of electronic manufacturing services products. Operating income in the third quarter of 2016 reflected the impact of higher sales, as well as overall improved margins, favorable product mix and higher pension income of $0.7 million.

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