Financial Data and Key Metrics - Q4 2023 operating cash flow was $164.4 million, down from $237.7 million in 2022, while free cash flow was $124.2 million, down from $203.6 million in 2022 [5] - Depreciation and amortization expense was $77.4 million in Q4 2023, compared to $81.8 million in 2022 [122] - Net debt at the end of Q4 2023 was approximately $2.60 billion, with total debt of $3.24 billion and cash of $48.3 million [122] - Full-year 2024 GAAP EPS guidance is $17.15 to $17.53, and non-GAAP EPS is $20.35 to $20.68, with an estimated tax rate of 22.5% [12] Business Segment Performance - Digital Imaging segment (56% of revenue) saw Q4 healthcare revenue increase 13.5%-14%, aerospace and defense revenue increase 5%, offset by weakness in industrial and scientific vision systems [7] - FLIR business saw Q4 revenue increase 4.8%, with surveillance systems growing 16.5% and detection products also showing robust growth [14] - Instrumentation segment (23% of revenue) saw Q4 sales increase 2.8%, with marine instruments up 14.7%, while environmental instruments decreased 7.3% [36][46] - Aerospace and Defense Electronics segment (13% of revenue) saw Q4 sales increase 3.4%, driven by commercial aerospace products [60] - Engineered Systems segment (8% of revenue) saw Q4 revenue decrease 3.8%, but operating profit increased with margins up 325 basis points [61] Market Performance - Marine business saw strong growth in offshore energy, global defense, and ocean science markets [46] - Industrial automation and laboratory instrumentation markets faced headwinds, with declines in industrial imaging systems and MEMS [44] - Defense business saw strong order intake, particularly in modernization and stockpile replacement programs [94] Strategic Direction and Industry Competition - The company is focusing on cost structure optimization and margin improvement, with expected segment margin expansion of 50-100 basis points in 2024 [70] - The company is consolidating leased spaces into owned spaces, which is expected to save $500,000-$700,000 annually [10] - The company is pursuing smaller bolt-on acquisitions, as larger deals remain expensive [21][112] Management Commentary on Operating Environment and Future Outlook - Management expects a linear ramp in sales and earnings throughout 2024, with average revenue growth of 4% and margin improvement of 50-60 basis points [32] - Short-cycle businesses are expected to recover in the second half of 2024, with industrial automation and laboratory instrumentation markets showing signs of improvement [20][95] - The company is cautious about macroeconomic shocks but remains confident in its ability to generate record cash flow and execute acquisitions [65] Other Important Information - The company paid down $680 million of debt in 2023, reducing its net debt-to-EBITDA ratio to 1.9, with further reduction expected in 2024 [87] - The company expects to make additional tax payments in 2024, which impacted Q4 2023 cash flow [121] Q&A Summary Question: Can you provide more details on the growth assumptions for 2024? - The company expects 4% organic revenue growth, with instrumentation growing 3.5%, digital imaging above 4%, aerospace and defense 5%, and engineered systems 4% [13][82] Question: What is driving the margin improvement in 2024? - Margin improvement is driven by cost structure optimization, price increases, and growth in longer-cycle businesses [25][67] Question: How is the pricing environment evolving? - The company expects 2%-3% price increases in 2024, similar to 2023, with higher increases in non-government contracts [101][116] Question: What is the outlook for defense awards? - The company has a strong pipeline of defense programs, including new products like the Black Hornet 4 and space-based systems [40][123] Question: Are there plans for stock buybacks or splits? - The company prefers acquisitions over stock buybacks and has no current plans for a stock split [99][118]

Core Insights - Teledyne e2v has introduced the OnyxMax 1.3M pixel CMOS imaging sensor, which is designed for high-performance applications in various industries [1][2] - The OnyxMax sensor features a low-light sensitivity of 1 mLux and a high dynamic range (HDR) mode with a range of 100 dB, making it suitable for demanding imaging tasks [2] Group 1: Product Features - The OnyxMax sensor has a resolution of 1,280 x 1,024 pixels and utilizes Teledyne's HiRho technology for enhanced performance [2] - It offers a quantum efficiency (QE) of 58% at a wavelength of 850 nm and a modulation transfer function (MTF) of 63% [2] - The sensor operates with a signal-to-noise ratio (SNR) of 75 dB and is capable of HDR imaging, which is critical for applications requiring detailed image capture in varying light conditions [2] Group 2: Market Positioning - Teledyne e2v aims to position the OnyxMax sensor as a leading solution for industries such as space, defense, and industrial applications, highlighting its advanced imaging capabilities [2] - The product will be showcased at the SPIE Photonics West event, indicating the company's commitment to innovation and market presence [2]

Core Insights - Teledyne DALSA has launched the AxCIS Contact Image Sensor, which enhances imaging capabilities for various applications [1] - The AxCIS sensor operates at a speed of 120 kHz, with a resolution of 900 dpi, and supports HDR imaging [1] - The sensor is designed for high-precision detection systems, ensuring 100% accuracy in HDR imaging [1] Product Features - The AxCIS sensor features a dual HDR capability, operating at 60 kHz x 2, which allows for improved image quality [1] - It has a pixel size of 28 µm, contributing to its high-resolution output [1] - The sensor supports Camera Link HS SFP+ interface, facilitating high-speed data transfer [1] Applications - The AxCIS sensor is suitable for various detection systems, enhancing the performance of imaging solutions in industrial applications [1] - Teledyne DALSA aims to provide advanced vision solutions through the integration of the AxCIS sensor into their product offerings [1]

Core Insights - Teledyne e2v has launched the Emerald Gen2, a new CMOS imaging solution designed for high-performance applications in various industries [1] Group 1: Product Features - The Emerald Gen2 offers resolutions of 8.9 million pixels (4,096 x 2,160) and 12 million pixels (4,096 x 3,072), providing enhanced imaging capabilities [1] - It features a 2.8µm pixel size and includes 10 and 12-bit ADC models with a signal-to-noise ratio of 67 dB, indicating high-quality image capture [1] - The compact design of the Emerald Gen2 measures 21 x 20 mm², making it suitable for integration into various systems [1] Group 2: Market Applications - The Emerald Gen2 is positioned for use in space applications, industrial automation, and other sectors requiring advanced imaging solutions [1] - The product is expected to be showcased at the ITE event in December 2023, highlighting its capabilities to potential clients [1] Group 3: Company Strategy - Teledyne e2v aims to enhance its imaging solutions portfolio with the introduction of the Emerald Gen2, targeting a diverse range of customers and applications [1] - The company emphasizes its commitment to innovation in imaging technology, as reflected in the development of the Emerald Gen2 [1]

Part I Financial Information [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Presents unaudited condensed consolidated financial statements for Q3 and nine months ended October 1, 2023, including income, balance, and cash flow statements [Condensed Consolidated Statements of Income (Loss)](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20(Loss)) Net sales and net income increased in Q3 2023, with diluted EPS rising to $4.15, while nine-month net income remained flat Consolidated Income Statement Highlights (in millions, except per-share amounts) | Metric | Q3 2023 | Q3 2022 | Nine Months 2023 | Nine Months 2022 | | :--- | :--- | :--- | :--- | :--- | | **Net Sales** | $1,402.5 | $1,363.6 | $4,210.5 | $4,040.4 | | **Operating Income** | $264.3 | $245.2 | $762.9 | $698.2 | | **Net Income Attributable to Teledyne** | $198.6 | $178.3 | $562.6 | $562.2 | | **Diluted Earnings Per Share** | $4.15 | $3.74 | $11.75 | $11.79 | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets slightly decreased to $14.22 billion, while total liabilities and long-term debt significantly reduced, and stockholders' equity increased Consolidated Balance Sheet Highlights (in millions) | Metric | Oct 1, 2023 | Jan 1, 2023 | | :--- | :--- | :--- | | **Cash and cash equivalents** | $508.6 | $638.1 | | **Total Assets** | $14,215.8 | $14,354.0 | | **Total Liabilities** | $5,489.7 | $6,181.1 | | **Long-term debt, net of current portion** | $2,794.0 | $3,620.5 | | **Total Stockholders' Equity** | $8,721.9 | $8,169.2 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities significantly increased to $671.7 million, while overall cash and cash equivalents decreased due to investing and financing activities Consolidated Cash Flow Highlights (Nine Months Ended, in millions) | Activity | 2023 | 2022 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $671.7 | $249.1 | | **Net cash used in investing activities** | $(127.3) | $(63.9) | | **Net cash used in financing activities** | $(665.7) | $(115.2) | | **Change in cash and cash equivalents** | $(129.5) | $4.6 | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Detailed notes cover business acquisitions, segment performance, revenue breakdown, debt reduction, and trade compliance matters - In Q1 2023, the company acquired ChartWorld International Limited for **$53.5 million** in cash, which is now part of the Digital Imaging segment[24](index=24&type=chunk) - As of October 1, 2023, the company had remaining performance obligations of **$3,122.5 million**, with approximately **80%** expected to be recognized as revenue within the next twelve months[40](index=40&type=chunk) - Total debt was reduced to **$3,244.1 million** at October 1, 2023, from **$3,920.6 million** at the start of the year, following repayments of credit facility borrowings, senior notes, and a term loan[52](index=52&type=chunk)[132](index=132&type=chunk) - The company has made voluntary disclosures to U.S. authorities regarding potential export violations. The potential financial impact is not yet reasonably estimable[72](index=72&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q3 2023 performance, highlighting sales growth, segment results, liquidity, and ongoing supply chain challenges - The company's strategy focuses on growth in its four segments through targeted acquisitions and product development, complemented by a focus on operational excellence and cost containment[79](index=79&type=chunk) - The company continues to experience supply chain challenges, including long lead times and cost inflation for parts, logistics, and labor, which are expected to persist through Q4 2023 and into 2024[81](index=81&type=chunk) - In Q3 2023, the company recorded **$5.8 million** in FLIR-related integration costs, including employee separation and facility consolidation costs, with an additional **$3.0 to $4.0 million** expected in the next six months[79](index=79&type=chunk)[89](index=89&type=chunk) [Results of Operations](index=22&type=section&id=Results%20of%20Operations) Q3 2023 net sales rose 2.9% and net income increased 11.4%, while nine-month sales grew 4.2% with a nearly flat net income Quarterly and Year-to-Date Performance vs. Prior Year | Period | Net Sales Change | Net Income Change | Diluted EPS | | :--- | :--- | :--- | :--- | | **Q3 2023** | +2.9% | +11.4% | $4.15 | | **Nine Months 2023** | +4.2% | +0.1% | $11.75 | - Cost of sales as a percentage of net sales decreased in both the third quarter (**56.8%** vs **57.6%**) and the first nine months (**56.9%** vs **57.6%**) of 2023 compared to 2022[88](index=88&type=chunk)[97](index=97&type=chunk) [Segment Results](index=24&type=section&id=Segment%20Results) Q3 2023 saw sales growth in most segments, with Instrumentation leading operating income growth, and all segments showing nine-month sales and operating income increases Q3 2023 vs Q3 2022 Segment Performance (in millions) | Segment | Net Sales | Sales Change | Operating Income | Op. Income Change | | :--- | :--- | :--- | :--- | :--- | | **Digital Imaging** | $775.8 | (0.3)% | $136.3 | +1.9% | | **Instrumentation** | $329.1 | +7.4% | $85.5 | +20.3% | | **Aerospace and Defense Electronics** | $183.3 | +8.1% | $49.4 | +11.5% | | **Engineered Systems** | $114.3 | +4.1% | $10.9 | (8.4)% | - The Instrumentation segment's growth was driven by a **$22.5 million** increase in marine instrumentation sales due to the recovery in offshore energy markets[114](index=114&type=chunk) - The Engineered Systems segment's operating income declined in Q3 due to a higher mix of lower-margin cost-reimbursable space programs[127](index=127&type=chunk) [Financial Condition, Liquidity and Capital Resources](index=27&type=section&id=Financial%20Condition,%20Liquidity%20and%20Capital%20Resources) Strong financial condition with nearly $700 million debt reduction, significant increase in operating cash flow, and sufficient liquidity for future needs - Total debt decreased from **$3,920.6 million** at the start of 2023 to **$3,244.1 million** at October 1, 2023[132](index=132&type=chunk) - Net cash from operating activities for the first nine months of 2023 was **$671.7 million**, compared to **$249.1 million** in the prior year, partly due to deferred U.S. federal tax payments of approximately **$139 million** into Q4 2023[135](index=135&type=chunk) - As of October 1, 2023, **$1,130.9 million** was available under the company's **$1.15 billion** credit facility[132](index=132&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=29&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes to market risk disclosures previously reported in the 2022 Annual Report on Form 10-K - There were no material changes to the Quantitative and Qualitative Disclosure About Market Risk provided in the company's 2022 Form 10-K[146](index=146&type=chunk) [Controls and Procedures](index=29&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including CEO and CFO, concluded that disclosure controls and procedures were effective as of October 1, 2023 - The company's principal executive officer and principal financial officer concluded that disclosure controls and procedures were effective as of October 1, 2023[147](index=147&type=chunk) Part II Other Information [Legal Proceedings](index=29&type=section&id=Item%201.%20Legal%20Proceedings) Information regarding legal proceedings is detailed in Note 14 of the financial statements under commitments and contingencies - Information regarding legal proceedings is provided in Part I, Item 1, Note 14, under "Commitments and Contingencies"[148](index=148&type=chunk) [Risk Factors](index=29&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors previously disclosed in the company's 2022 Annual Report on Form 10-K - There are no material changes to the risk factors previously disclosed in the company's 2022 Form 10-K[148](index=148&type=chunk) [Other Information](index=29&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements in Q3 2023 - No directors or officers adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the fiscal quarter ended October 1, 2023[149](index=149&type=chunk) [Exhibits](index=30&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with Form 10-Q, including CEO and CFO certifications and Interactive Data Files (XBRL) - The report includes CEO and CFO certifications under Sections 302 and 906 of the Sarbanes-Oxley Act, as well as XBRL data files[150](index=150&type=chunk)[156](index=156&type=chunk)

Teledyne Technologies Incorporated (NYSE:TDY) Q3 2023 Results Conference Call October 25, 2023 11:00 AM ET Company Participants Jason VanWees - Vice Chairman Robert Mehrabian - Chairman, President and CEO Sue Main - SVP and CFO Conference Call Participants Jim Ricchiuti - Needham & Company Joe Giordano - TD Cowen Greg Konrad - Jefferies Andrew Buscaglia - BNP Rob Jamieson - UBS Kristine Liwag - Morgan Stanley Noah Poponak - Goldman Sachs Operator Ladies and gentlemen, thank you for standing by. Welcome to T ...

(e) Other includes commercial or foreign government sales of electronics for microwave and satellite communications, industrial interconnect systems, electronic components and other product lines 33% 37% 17% 4% 6% Aerospace Engines Aerospace Castings 34% 32% 19% 7% 7% Instrumentation Digital Imaging Aerospace & Defense Electronics Engineered Systems Divested Operations Aerospace Engines $657 Million $1.64 Billion ~$5.47 Billion Printed Circuits 3% Printed Circuits 1% 12% 23% 7% 58% History of Focused, Succe ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _____________________________________ FORM 10-Q _____________________________________ For the quarterly period ended July 2, 2023 ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 1-15295 _____________________________________ TELE ...

Financial Data and Key Metrics Changes - The company achieved record quarterly sales with an overall increase of 5.1% year-over-year, with GAAP operating margin reaching 18% and non-GAAP operating margin at 21.4% [29][30] - GAAP earnings per share were $3.87, while non-GAAP earnings reached $4.67, both setting second-quarter records [30] - The consolidated leverage ratio declined to 2.1x due to continued debt repayment totaling about $620 million year-to-date [30] Business Line Data and Key Metrics Changes - Digital Imaging segment sales increased by 2.3%, driven by higher sales of X-ray products and commercial infrared imaging components, although lower sales in unmanned ground systems impacted overall performance [42] - Instrumentation segment sales rose by 5.1%, with marine instruments increasing by 10.5% due to recovery in offshore energy markets [34] - Aerospace and Defense Electronics segment saw a 10.2% increase in sales, with significant growth in both Defense Electronics and Commercial Aerospace products [57] Market Data and Key Metrics Changes - The company noted some headwinds in the commercial digital imaging market in the Far East, particularly in China, but emphasized that less than 10% of its portfolio is sold there [2][72] - The order intake for oscilloscopes was strong, with a book-to-bill ratio close to 1, indicating stable demand [13][52] Company Strategy and Development Direction - The company is focusing on execution and margin improvement, particularly in the FLIR Defense portfolio, which has shown a significant increase in order book and backlog [31][40] - Management is optimistic about the growth potential in the Aerospace and Defense sectors, with expectations of mid-single to single-digit growth year-over-year [17] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the business despite economic uncertainties, highlighting a balanced portfolio that mitigates risks [64][72] - The company anticipates a flat or slightly declining margin in Digital Imaging for the year, but expects overall margin expansion across other segments [15][25] Other Important Information - Supply chain challenges have improved significantly, with costs down by 65% to 70% compared to the previous year [4] - The company is maintaining its full-year sales and non-GAAP earnings outlook, projecting approximately 5% growth for 2023 [33][41] Q&A Session Summary Question: Can you provide an update on digital imaging margins? - Management acknowledged that margins in legacy businesses are strong and projected overall margins for Digital Imaging to be around 22.3% for the year, with potential for expansion in 2024 [48] Question: What is the outlook for the Aerospace and Defense segment? - Management indicated that the segment is expected to see continued growth, with a healthy order book and increasing expenditures in NATO countries [17][40] Question: Are there any constraints affecting Defense deliveries? - Some deliveries are expected in 2023, while others will extend into future years, with a balanced approach to managing backlog and customer inventory [19][20]

[Part I: Financial Information](index=3&type=section&id=Part%20I%20Financial%20Information) [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Teledyne reported increased Q1 2023 net sales and operating cash flow, despite a decline in net income primarily due to tax normalization [Condensed Consolidated Statements of Income](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Q1 2023 saw increased net sales and operating income, but net income declined due to a shift from tax benefit to expense Q1 2023 vs Q1 2022 Income Statement Highlights (in millions, except per-share amounts) | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net sales | $1,383.3 | $1,321.0 | | Operating income | $242.5 | $223.5 | | Provision (benefit) for income taxes | $44.9 | $(9.6) | | Net income attributable to Teledyne | $178.7 | $212.6 | | Diluted earnings per common share | $3.73 | $4.46 | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets slightly increased to $14.43 billion, while liabilities decreased, leading to higher stockholders' equity Balance Sheet Highlights (in millions) | Metric | April 2, 2023 | January 1, 2023 | | :--- | :--- | :--- | | Total current assets | $2,882.4 | $2,817.9 | | Goodwill | $7,925.5 | $7,873.0 | | Total Assets | $14,429.3 | $14,354.0 | | Total Liabilities | $6,059.9 | $6,181.1 | | Total Stockholders' Equity | $8,365.7 | $8,169.2 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow significantly improved to $203.0 million in Q1 2023, offsetting increased cash usage in investing and financing activities Cash Flow Summary (in millions) | Activity | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $203.0 | $(216.7) | | Net cash provided by (used in) investing activities | $(76.9) | $(19.6) | | Net cash provided by (used in) financing activities | $(103.4) | $42.6 | | Change in cash and cash equivalents | $27.1 | $(190.4) | - The significant year-over-year improvement in operating cash flow was partially due to a **$296.4 million payment** to the Swedish Tax Authority in Q1 2022 related to a disputed pre-acquisition FLIR tax matter[113](index=113&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Key notes include the ChartWorld acquisition, segment sales growth, remaining performance obligations, debt reduction, and tax rate normalization - In Q1 2023, the company acquired ChartWorld International Limited for **$52.5 million in cash**, adding it to the Digital Imaging segment[25](index=25&type=chunk) - As of April 2, 2023, the company had **$3,198.8 million in remaining performance obligations**, with approximately **82% expected to be recognized as revenue** within the next twelve months[40](index=40&type=chunk) - The Q1 2023 effective tax rate was **20.1%**, compared to **-4.7% in Q1 2022**, which included a **$50.0 million non-cash income tax benefit** from the resolution of certain FLIR tax reserves[55](index=55&type=chunk)[89](index=89&type=chunk) - Subsequent to the end of the first quarter, on April 3, 2023, the Company repaid **$300.0 million of fixed rate senior notes**[53](index=53&type=chunk)[109](index=109&type=chunk) [Management's Discussion and Analysis (MD&A)](index=18&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) MD&A highlights Q1 2023 sales growth across all segments, improved operating income, and strong liquidity despite tax rate normalization - The company's strategy focuses on growth in its four core segments through targeted acquisitions, product development, and operational excellence[74](index=74&type=chunk) - Business is affected by ongoing supply chain challenges, cost inflation for parts and labor, and adverse impacts from the strengthening of the U.S. dollar[76](index=76&type=chunk)[77](index=77&type=chunk) [Results of Operations](index=19&type=section&id=Results%20of%20Operations) Q1 2023 net sales and operating income increased, but net income declined significantly due to a shift in income tax provision Q1 2023 vs Q1 2022 Performance (in millions) | Metric | Q1 2023 | Q1 2022 | % Change | | :--- | :--- | :--- | :--- | | Net sales | $1,383.3 | $1,321.0 | 4.7% | | Operating income | $242.5 | $223.5 | 8.5% | | Net income attributable to Teledyne | $178.7 | $212.6 | (15.9)% | - Excluding discrete tax items, the effective tax rate was stable at **23.0% in Q1 2023** compared to **23.1% in Q1 2022**, with the prior year's reported rate skewed by a **$50.0 million benefit** from resolving FLIR tax reserves[89](index=89&type=chunk) [Segment Results](index=20&type=section&id=Segment%20Results) All four business segments, including Digital Imaging, Instrumentation, Aerospace and Defense, and Engineered Systems, reported sales and operating income growth Q1 2023 vs Q1 2022 Segment Performance (in millions) | Segment | Net Sales (2023) | Net Sales (2022) | % Change | Operating Income (2023) | Operating Income (2022) | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Digital Imaging | $772.5 | $750.5 | 2.9% | $122.2 | $115.7 | 5.6% | | Instrumentation | $333.5 | $308.9 | 8.0% | $80.7 | $71.6 | 12.7% | | Aerospace and Defense Electronics | $173.2 | $166.2 | 4.2% | $47.0 | $42.9 | 9.6% | | Engineered Systems | $104.1 | $95.4 | 9.1% | $10.0 | $9.4 | 6.4% | - Digital Imaging sales growth was driven by acquisitions and higher sales of industrial cameras, partially offset by lower sales of unmanned ground systems for defense[92](index=92&type=chunk) - Instrumentation growth was broad, with marine instrumentation sales up **$16.3 million**, test and measurement up **$4.4 million**, and environmental up **$3.9 million**[96](index=96&type=chunk) [Financial Condition, Liquidity and Capital Resources](index=22&type=section&id=Financial%20Condition%2C%20Liquidity%20and%20Capital%20Resources) The company maintained a strong financial position with reduced debt, improved operating cash flow, and ample credit facility availability - Net cash from operating activities was **$203.0 million**, compared to net cash used of **$216.7 million in Q1 2022**, which included a **$296.4 million tax payment** to the Swedish Tax Authority[113](index=113&type=chunk) - Investing activities included **$52.5 million** for the purchase of businesses and **$24.4 million** for capital expenditures[114](index=114&type=chunk) - Financing activities included a **$100.0 million repayment** on the credit facility[115](index=115&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=24&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes to market risk disclosures were reported compared to the prior fiscal year's Annual Report on Form 10-K - There were no material changes to the disclosures about market risk from the company's 2022 Form 10-K[124](index=124&type=chunk) [Controls and Procedures](index=24&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective at a reasonable assurance level as of April 2, 2023 - The company's principal executive officer and principal financial officer concluded that disclosure controls and procedures were effective as of April 2, 2023[125](index=125&type=chunk) [Part II: Other Information](index=24&type=section&id=Part%20II%20Other%20Information) [Legal Proceedings](index=24&type=section&id=Item%201.%20Legal%20Proceedings) Ongoing trade compliance matters and voluntary export violation disclosures are pending, though no material adverse effect is currently anticipated - The U.S. Department of State closed the four-year Consent Agreement with FLIR, but the company has made other voluntary disclosures to U.S. and foreign authorities regarding potential export violations[69](index=69&type=chunk)[70](index=70&type=chunk) - The company is unable to reasonably estimate the potential loss or penalty related to these ongoing trade compliance matters[70](index=70&type=chunk) [Risk Factors](index=24&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the previously disclosed risk factors from the 2022 Annual Report on Form 10-K were reported - No material changes to the risk factors previously disclosed in the 2022 Form 10-K were reported[126](index=126&type=chunk) [Other Information](index=24&type=section&id=Item%205.%20Other%20Information) Credit agreements were amended to replace LIBOR with SOFR and adjust the leverage ratio covenant for significant acquisitions - The company amended its credit agreements to replace the LIBOR benchmark with SOFR for U.S. dollar-denominated loans[127](index=127&type=chunk) - The leverage ratio covenant was modified to allow the ratio to temporarily increase from **3.50:1 to 4.00:1** for four quarters following an acquisition with consideration exceeding **$100 million**[128](index=128&type=chunk) [Exhibits](index=26&type=section&id=Item%206.%20Exhibits) Filed exhibits include credit agreement amendments, officer certifications, and XBRL data files - Filed exhibits include amendments to credit agreements (Exhibits 10.1, 10.2, 10.3) and CEO/CFO certifications (Exhibits 31.1, 31.2, 32.1, 32.2)[130](index=130&type=chunk)