Teledyne Technologies(TDY) - 2026 Q2 - Quarterly Results

Executive Summary Q2 2025 Financial Performance Overview Teledyne reported record Q2 2025 net sales of $1,513.7 million, a 10.2% increase year-over-year, driven by organic growth and acquisitions. GAAP diluted EPS rose 17.5% to $4.43, and non-GAAP diluted EPS increased 13.5% to $5.20. Operating margin improved to 18.4% (GAAP) and 22.2% (non-GAAP) Q2 2025 vs Q2 2024 Financial Highlights | Metric | Q2 2025 (GAAP) | Q2 2024 (GAAP) | Change (%) | | :-------------------------------- | :------------- | :------------- | :--------- | | Net Sales | $1,513.7 million | $1,374.1 million | 10.2% | | Net Income Attributable to Teledyne | $209.9 million | $180.2 million | 16.5% | | Diluted EPS | $4.43 | $3.77 | 17.5% | | Operating Margin | 18.4% | 18.0% | 0.4 pp | | Non-GAAP Net Income Attributable to Teledyne | $246.3 million | $218.7 million | 12.6% | | Non-GAAP Diluted EPS | $5.20 | $4.58 | 13.5% | | Non-GAAP Operating Margin | 22.2% | 21.6% | 0.6 pp | | Cash from Operations | $226.6 million | N/A | N/A | | Free Cash Flow | $196.3 million | N/A | N/A | | Consolidated Leverage Ratio (Quarter-end) | 1.6x | N/A | N/A | - Net sales included $70.1 million in incremental sales from current and prior year acquisitions[2] - Company increased stock repurchase authorization to $2.0 billion, replacing previous authorization of which $896 million remained[3] Management Commentary Executive Chairman Robert Mehrabian highlighted record quarterly sales, achieving the greatest total and organic sales growth in three years, with organic growth across all segments and orders exceeding sales for the seventh consecutive quarter. The company raised the low end of its full-year non-GAAP earnings outlook but expressed caution for Q3 due to potential accelerated demand in Q2 from uncertain global trade policies - Achieved greatest total and organic sales growth in three years[4] - Sales grew organically in every segment, and orders exceeded sales for the seventh consecutive quarter[4] - Raised the low end of full-year non-GAAP earnings outlook[4] - Exercising caution regarding the third quarter, as the second quarter likely benefited from a degree of accelerated demand given uncertain global trade policies[4] - Will continue to consider stock repurchases when Teledyne is the best value acquisition available, while pursuing a number of acquisitions[4] Segment Performance Review Digital Imaging The Digital Imaging segment reported a 4.3% increase in net sales to $771.0 million and a 5.4% increase in operating income to $119.6 million in Q2 2025. Sales growth was primarily driven by unmanned air systems and commercial infrared imaging components, partially offset by declines in X-ray and geospatial products Digital Imaging Segment Performance (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :-------------------- | :---------- | :---------- | :--------- | | Net Sales | $771.0 million | $739.4 million | 4.3% | | Operating Income | $119.6 million | $113.5 million | 5.4% | | Non-GAAP Operating Income | $165.9 million | $159.9 million | 3.8% | - Net sales increased primarily due to higher sales of unmanned air systems and commercial infrared imaging components[7] - Sales were partially offset by lower sales of X-ray and geospatial products[7] - Increase in operating income was primarily due to the increase in net sales as well as lower selling, general and administrative expense, offset by unfavorable product mix, higher severance and facility consolidation costs, and higher research and development expense[7] Instrumentation The Instrumentation segment's net sales increased by 10.2% to $367.6 million, and operating income grew by 16.5% to $101.6 million in Q2 2025. The growth was primarily fueled by stronger offshore energy and defense markets, leading to increased marine instrumentation sales, as well as higher environmental and electronic test and measurement instrumentation sales Instrumentation Segment Performance (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :-------------------- | :---------- | :---------- | :--------- | | Net Sales | $367.6 million | $333.5 million | 10.2% | | Operating Income | $101.6 million | $87.2 million | 16.5% | | Non-GAAP Operating Income | $104.9 million | $90.7 million | 15.7% | - Net sales increase resulted from a $23.7 million increase in sales of marine instrumentation primarily due to stronger offshore energy and defense markets, a $6.4 million increase in sales of environmental instrumentation and a $4.0 million increase in sales of electronic test and measurement instrumentation[9] - Increase in operating income primarily reflected the impact of higher marine instrumentation sales as well as favorable marine instrumentation product mix[9] Aerospace and Defense Electronics The Aerospace and Defense Electronics segment experienced significant growth in Q2 2025, with net sales surging 36.2% to $264.8 million and operating income increasing 16.6% to $66.6 million. This strong performance was largely due to higher defense electronics sales, including $64.3 million from recent acquisitions, partially offset by lower aerospace electronics sales Aerospace and Defense Electronics Segment Performance (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :-------------------- | :---------- | :---------- | :--------- | | Net Sales | $264.8 million | $194.4 million | 36.2% | | Operating Income | $66.6 million | $57.1 million | 16.6% | | Non-GAAP Operating Income | $73.4 million | $57.3 million | 28.1% | - Net sales reflected higher sales of $72.6 million for defense electronics, including $64.3 million of incremental defense electronics sales from recent acquisitions[11] - Sales were partially offset by lower sales of $2.2 million for aerospace electronics[11] - Increase in operating income primarily reflected the impact of higher sales, partially offset by higher transaction and integration costs as well as higher acquired intangible amortization expense[11] Engineered Systems The Engineered Systems segment saw a 3.3% rise in net sales to $110.3 million and a substantial 61.3% increase in operating income to $12.1 million in Q2 2025. The improved operating income was primarily driven by a favorable program mix Engineered Systems Segment Performance (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :-------------------- | :---------- | :---------- | :--------- | | Net Sales | $110.3 million | $106.8 million | 3.3% | | Operating Income | $12.1 million | $7.5 million | 61.3% | - Net sales reflected higher sales of $4.0 million for engineered products, partially offset by lower sales of $0.5 million for energy systems[13] - Increase in operating income was primarily driven by favorable program mix in the second quarter of 2025[13] Financial Position and Cash Flow Cash Flow Analysis Cash provided by operating activities decreased to $226.6 million in Q2 2025 from $318.7 million in Q2 2024, primarily due to higher income tax payments. Capital expenditures increased significantly to $30.3 million, resulting in free cash flow of $196.3 million Cash Flow Summary (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change | | :-------------------------------- | :---------- | :---------- | :------- | | Cash provided by operating activities | $226.6 million | $318.7 million | -$92.1 million | | Capital expenditures | $30.3 million | $17.7 million | +$12.6 million | | Free Cash Flow | $196.3 million | $301.0 million | -$104.7 million | - Decrease in operating cash flow driven primarily by higher income tax payments in the second quarter of 2025[14] - Depreciation and amortization expense for the second quarter of 2025 was $86.5 million compared with $77.8 million[14] - Stock-based compensation expense for the second quarter of 2025 was $11.3 million compared with $9.3 million[14] Debt and Liquidity As of June 29, 2025, net debt increased to $2,306.5 million from $1,999.2 million at December 29, 2024. The company repaid $315.0 million on its credit facility and repurchased $30.0 million of senior notes during Q2 2025 Debt and Liquidity (June 29, 2025 vs December 29, 2024) | Metric | June 29, 2025 | December 29, 2024 | Change | | :-------------------------- | :-------------- | :---------------- | :------- | | Total Debt | $2,617.4 million | $2,649.0 million | -$31.6 million | | Cash and Cash Equivalents | $310.9 million | $649.8 million | -$338.9 million | | Net Debt | $2,306.5 million | $1,999.2 million | +$307.3 million | - As of June 29, 2025, $1,168.0 million was available under the $1.20 billion credit facility[17] Income Taxes The effective tax rate for Q2 2025 was 19.3%, down from 22.2% in Q2 2024, benefiting from net discrete income tax benefits of $8.4 million Effective Tax Rate (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change | | :------------------ | :------ | :------ | :----- | | Effective Tax Rate | 19.3% | 22.2% | -2.9 pp | | Net Discrete Income Tax Benefits | $8.4 million | $0.7 million | +$7.7 million | Other Corporate Financials Corporate expense increased to $21.7 million in Q2 2025, including $1.3 million in transaction and integration costs. Interest expense, net, rose to $17.6 million due to increased borrowings on the credit facility Other Corporate Financials (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change | | :-------------------------------- | :---------- | :---------- | :------- | | Corporate Expense | $21.7 million | $18.3 million | +$3.4 million | | Non-service Retirement Benefit Income | $2.7 million | $2.7 million | 0% | | Interest Expense, net | $17.6 million | $15.8 million | +$1.8 million | - Corporate expense for Q2 2025 included $1.3 million of pretax transaction and integration costs[20] - Increase in interest expense, net, due to increased borrowings on the credit facility compared with the second quarter of 2024[20] Financial Outlook Q3 and Full Year 2025 Guidance Teledyne raised its full-year 2025 GAAP diluted EPS outlook to $17.59 to $17.97 and narrowed its non-GAAP EPS outlook to $21.20 to $21.50. For Q3 2025, GAAP diluted EPS is projected to be $4.39 to $4.54, and non-GAAP diluted EPS is expected to be $5.35 to $5.45 Q3 and Full Year 2025 Diluted EPS Outlook | Metric | Q3 2025 (Low) | Q3 2025 (High) | FY 2025 (Low) | FY 2025 (High) | Prior FY 2025 (Low) | Prior FY 2025 (High) | | :----------------------------------- | :------------ | :------------- | :------------ | :------------- | :------------------ | :------------------- | | GAAP Diluted EPS Outlook | $4.39 | $4.54 | $17.59 | $17.97 | $17.35 | $17.83 | | Non-GAAP Diluted EPS Outlook | $5.35 | $5.45 | $21.20 | $21.50 | $21.10 | $21.50 | - The non-GAAP outlook excludes acquired intangible asset amortization, transaction and integration costs, inventory step-up expense and FLIR acquisition-related tax matters[21] Non-GAAP Financial Measures and Disclosures Explanation of Non-GAAP Measures Teledyne uses non-GAAP financial measures to supplement GAAP reporting, providing additional insights into performance by adjusting for infrequent or non-recurring acquisition-related items. These measures are used by management, analysts, and investors to evaluate ongoing business trends and comparability, but are not substitutes for GAAP results - Non-GAAP financial measures provide management, financial analysts and investors with additional useful information for evaluating the company's performance and understanding operating results and trends in the ongoing business by adjusting for certain expenses and benefits[22][49] - Non-GAAP financial measures are not meant to be considered superior to, or a substitute for, financial statements prepared in accordance with GAAP and have material limitations[50] - Specific non-GAAP measures include income before income taxes, net income, diluted earnings per common share, operating income, operating margin, total debt, net debt, cash provided by operations, and free cash flow[51][52][53][54][55] - Adjustments typically exclude acquired intangible asset amortization, transaction and integration costs, inventory step-up expense, and FLIR acquisition-related tax matters[51][52][57] Forward-Looking Statements Cautionary Notice The earnings release contains forward-looking statements subject to risks and uncertainties, which could cause actual results to differ materially from expectations. These risks include governmental and economic policies, trade tensions, tax law changes, foreign currency risks, interest rates, supply chain issues, inflation, labor shortages, and geopolitical conflicts - Forward-looking statements involve risks and uncertainties, are based on current expectations, and are not a guarantee of future performance or results[23][24] - Many factors could change anticipated results, including the impact of U.S. Presidential Administration policies, economic and diplomatic tension between China and the United States, changes in tax and other laws, foreign currency exchange risks, rising interest rates, supply chain shortages, higher inflation, labor shortages, global economic disruptions, and geopolitical conflicts (Israel, Russia-Ukraine)[25][26] - Acquisitions involve various inherent risks, such as the ability to integrate acquired businesses, retain key management and customers, achieve identified synergies, and risks associated with international operations[27] - Teledyne assumes no obligation to update forward-looking statements to reflect circumstances or events that occur after the date they were made, except as required by federal securities laws[29] Conference Call Information A live webcast of Teledyne's second quarter earnings conference call was scheduled for July 23, 2025, at 11:00 a.m. (Eastern), with a replay available for one month - A live webcast of Teledyne's second quarter earnings conference call was held at 11:00 a.m. (Eastern) on Wednesday, July 23, 2025, accessible via www.teledyne.com/investors/events-and-presentations[30](index=30&type=chunk) - A replay of the webcast will be available for one month starting at 12:00 p.m. (Eastern) on Wednesday, July 23, 2025[30] Condensed Consolidated Financial Statements (GAAP) Statements of Income The condensed consolidated statements of income show Teledyne's GAAP financial performance for Q2 and six months ended June 29, 2025, compared to the prior year. Net sales, operating income, and net income attributable to Teledyne all increased year-over-year for both periods Condensed Consolidated Statements of Income (Q2 and Six Months Ended, in millions) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--------------------------------------- | :---------- | :---------- | :-------------- | :-------------- | | Net sales | $1,513.7 | $1,374.1 | $2,963.6 | $2,724.2 | | Total costs and expenses | $1,235.5 | $1,127.1 | $2,426.1 | $2,242.9 | | Operating income (loss) | $278.2 | $247.0 | $537.5 | $481.3 | | Income (loss) before income taxes | $260.6 | $231.7 | $499.5 | $457.2 | | Net income (loss) attributable to Teledyne | $209.9 | $180.2 | $398.5 | $358.7 | | Diluted earnings per common share | $4.43 | $3.77 | $8.41 | $7.49 | Summary of Segment Net Sales and Operating Income This section provides a detailed breakdown of net sales and operating income by segment for Q2 and six months ended June 29, 2025, highlighting growth across all segments, particularly in Aerospace and Defense Electronics Segment Net Sales (Q2 and Six Months Ended, in millions) | Segment | Q2 2025 | Q2 2024 | % Change (Q2) | Six Months 2025 | Six Months 2024 | % Change (6M) | | :-------------------------- | :---------- | :---------- | :------------ | :-------------- | :-------------- | :------------ | | Digital Imaging | $771.0 | $739.4 | 4.3% | $1,528.0 | $1,480.2 | 3.2% | | Instrumentation | $367.6 | $333.5 | 10.2% | $710.9 | $663.9 | 7.1% | | Aerospace and Defense Electronics | $264.8 | $194.4 | 36.2% | $507.3 | $380.1 | 33.5% | | Engineered Systems | $110.3 | $106.8 | 3.3% | $217.4 | $200.0 | 8.7% | | Total Net Sales | $1,513.7 | $1,374.1 | 10.2% | $2,963.6 | $2,724.2 | 8.8% | Segment Operating Income (Q2 and Six Months Ended, in millions) | Segment | Q2 2025 | Q2 2024 | % Change (Q2) | Six Months 2025 | Six Months 2024 | % Change (6M) | | :-------------------------- | :---------- | :---------- | :------------ | :-------------- | :-------------- | :------------ | | Digital Imaging | $119.6 | $113.5 | 5.4% | $241.9 | $227.3 | 6.4% | | Instrumentation | $101.6 | $87.2 | 16.5% | $194.3 | $173.2 | 12.2% | | Aerospace and Defense Electronics | $66.6 | $57.1 | 16.6% | $122.3 | $109.0 | 12.2% | | Engineered Systems | $12.1 | $7.5 | 61.3% | $22.9 | $10.2 | 124.5% | | Corporate expense | ($21.7) | ($18.3) | 18.6% | ($43.9) | ($38.4) | 14.3% | | Total Operating Income | $278.2 | $247.0 | 12.6% | $537.5 | $481.3 | 11.7% | Balance Sheets The condensed consolidated balance sheets show an increase in total assets to $15,135.2 million as of June 29, 2025, from $14,200.5 million at December 29, 2024, primarily driven by growth in goodwill and acquired intangible assets. Total liabilities also increased, with a significant rise in the current portion of long-term debt Condensed Consolidated Balance Sheets (Key Items, in millions) | Metric | June 29, 2025 | December 29, 2024 | | :-------------------------------- | :-------------- | :---------------- | | Cash and cash equivalents | $310.9 | $649.8 | | Total current assets | $2,922.0 | $2,944.6 | | Goodwill and acquired intangible assets, net | $10,850.4 | $10,003.4 | | Total assets | $15,135.2 | $14,200.5 | | Total current liabilities | $1,758.0 | $1,261.6 | | Long-term debt, net of current portion | $2,167.2 | $2,648.7 | | Total liabilities | $4,751.9 | $4,645.1 | | Total stockholders' equity | $10,376.9 | $9,549.4 | - Current portion of long-term debt increased significantly from $0.3 million as of December 29, 2024, to $450.2 million as of June 29, 2025[36] Statements of Cash Flows The condensed consolidated statements of cash flows indicate a decrease in net cash provided by operating activities in Q2 2025 compared to Q2 2024, while net cash used in investing activities decreased due to no business purchases in Q2 2025. Net cash used in financing activities also decreased significantly Condensed Consolidated Statements of Cash Flows (Q2 Ended, in millions) | Metric | Q2 2025 | Q2 2024 | | :---------------------------------------- | :---------- | :---------- | | Net cash provided by (used in) operating activities | $226.6 | $318.7 | | Net cash provided by (used in) investing activities | ($30.2) | ($141.2) | | Net cash provided by (used in) financing activities | ($344.4) | ($644.0) | | Changes in cash and cash equivalents | ($150.6) | ($469.2) | | Cash and cash equivalents—end of period | $310.9 | $443.2 | - Purchases of businesses, net of cash acquired, were $0 in Q2 2025 compared to $123.6 million in Q2 2024[38] - In Q2 2025, the company made payments of $30.0 million on fixed rate senior notes and net payments of $315.0 million on its credit facility[38] Reconciliation of GAAP to Non-GAAP Financial Measures Net Income and Diluted EPS Reconciliation This section reconciles GAAP net income and diluted EPS to non-GAAP figures for Q2 and six months ended June 29, 2025, and June 30, 2024, by adjusting for transaction and integration costs, inventory step-up expense, acquired intangible asset amortization, and FLIR acquisition-related tax matters GAAP to Non-GAAP Net Income and Diluted EPS (Q2 2025, in millions, except EPS) | Metric | GAAP | Adjustments | Non-GAAP | | :-------------------------------- | :------- | :---------- | :------- | | Income Before Income Taxes | $260.6 | $57.7 | $318.3 | | Net Income Attributable to Teledyne | $209.9 | $36.4 | $246.3 | | Diluted Earnings per Common Share | $4.43 | $0.77 | $5.20 | GAAP to Non-GAAP Net Income and Diluted EPS (Six Months 2025, in millions, except EPS) | Metric | GAAP | Adjustments | Non-GAAP | | :-------------------------------- | :------- | :---------- | :-------- | | Income Before Income Taxes | $499.5 | $117.1 | $616.6 | | Net Income Attributable to Teledyne | $398.5 | $81.8 | $480.3 | | Diluted Earnings per Common Share | $8.41 | $1.72 | $10.13 | Operating Income and Operating Margin Reconciliation This section reconciles GAAP operating income and operating margin to non-GAAP figures for Q2 and six months ended June 29, 2025, and June 30, 2024, by excluding transaction and integration costs, inventory step-up expense, and acquired intangible asset amortization GAAP to Non-GAAP Operating Income and Margin (Q2 2025, in millions) | Metric | GAAP | Adjustments | Non-GAAP | | :-------------------- | :------- | :---------- | :------- | | Operating Income (Loss) | $278.2 | $57.7 | $335.9 | | Operating Margin | 18.4% | N/A | 22.2% | GAAP to Non-GAAP Operating Income and Margin (Six Months 2025, in millions) | Metric | GAAP | Adjustments | Non-GAAP | | :-------------------- | :------- | :---------- | :------- | | Operating Income (Loss) | $537.5 | $117.1 | $654.6 | | Operating Margin | 18.1% | N/A | 22.1% | Segment Operating Income Reconciliation This section provides a detailed reconciliation of GAAP to non-GAAP operating income for each segment, showing the impact of acquired intangible asset amortization, inventory step-up expense, and transaction and integration costs on segment performance for Q2 and six months ended June 29, 2025, and June 30, 2024 GAAP to Non-GAAP Segment Operating Income (Q2 2025, in millions) | Segment | GAAP Operating Income (Loss) | Acquired Intangible Asset Amortization | Inventory Step-up Expense | Transaction and Integration Costs | Non-GAAP Operating Income (Loss) | | :-------------------------- | :--------------------------- | :------------------------------------- | :------------------------ | :------------------------------ | :------------------------------- | | Digital Imaging | $119.6 | $46.3 | — | — | $165.9 | | Instrumentation | $101.6 | $3.3 | — | — | $104.9 | | Aerospace and Defense Electronics | $66.6 | $5.0 | $1.2 | $0.6 | $73.4 | | Engineered Systems | $12.1 | — | — | — | $12.1 | | Corporate expense | ($21.7) | — | — | $1.3 | ($20.4) | | Total | $278.2 | $54.6 | $1.2 | $1.9 | $335.9 | Net Debt and Outlook Reconciliation This section reconciles total debt to net debt and provides a non-GAAP diluted EPS outlook for Q3 and full year 2025, adjusting for specific items like transaction and integration costs, inventory step-up expense, acquired intangible asset amortization, and FLIR acquisition-related tax matters Net Debt Reconciliation (June 29, 2025 vs December 29, 2024, in millions) | Metric | June 29, 2025 | December 29, 2024 | | :-------------------------- | :-------------- | :---------------- | | Total debt — non-GAAP | $2,617.4 | $2,649.0 | | Less cash and cash equivalents | ($310.9) | ($649.8) | | Net debt — non-GAAP | $2,306.5 | $1,999.2 | Non-GAAP Diluted EPS Outlook Reconciliation (FY 2025, in millions, except EPS) | Metric | FY 2025 (Low) | FY 2025 (High) | | :----------------------------------- | :------------ | :------------- | | GAAP Diluted Earnings per Common Share Outlook | $17.59 | $17.97 | | Adjustments (Total) | $3.61 | $3.54 | | Non-GAAP Diluted Earnings per Common Share Outlook | $21.20 | $21.50 |