Financial Data and Key Metrics Changes - In Q4 2025, sales increased by 7.3% year-over-year, while non-GAAP earnings rose by 14.1% [4] - For the full year 2025, sales grew by 7.9%, and non-GAAP earnings increased by 11.5% [4] - Free cash flow was approximately $1.1 billion for two consecutive years, with a leverage ratio of 1.4 times at the end of 2025 [5] Business Line Data and Key Metrics Changes - Digital Imaging segment sales increased by 3.4% in Q4, driven by strong performance from Teledyne FLIR, particularly in infrared imaging components [7] - Instrumentation segment sales rose by 3.7% in Q4, with marine instruments increasing by 3.3% and environmental instruments up by 6.1% [10] - Aerospace and Defense Electronics segment saw a significant sales increase of 40.4% in Q4, primarily due to acquisitions and organic growth [10] - Engineered Systems segment revenue decreased by 9.9% in Q4 due to delayed contract awards, but operating margin improved [11] Market Data and Key Metrics Changes - The company reported a book-to-bill ratio of 1.07 for Q4, indicating a healthy order intake across segments [31] - Unmanned business revenue was approximately $500 million in 2025, expected to grow by about 10% in 2026 [40] Company Strategy and Development Direction - The company continues to execute its "String of Pearls" acquisition strategy, recently acquiring DD Scientific, a manufacturer of gas sensors [5] - Management remains confident in the growth of long-cycle businesses while expecting no contraction in short-cycle businesses for 2026 [13] - The focus remains on operational excellence, strategic acquisitions, and stock repurchases when market conditions are favorable [13] Management Comments on Operating Environment and Future Outlook - Management expressed optimism for 2026, projecting revenue of approximately $6.37 billion and non-GAAP earnings of about $23.65 per share [6] - The company anticipates normal seasonality in 2026, with approximately 48% of sales and 46% of earnings expected in the first half of the year [6] - Management highlighted the resilience of the business portfolio and the ability to cut costs while improving earnings and free cash flow [12] Other Important Information - Cash flow from operating activities was $379 million in Q4 2025, compared to $332.4 million in Q4 2024 [14] - The company ended Q4 with $2.12 billion in net debt [16] Q&A Session Summary Question: Outlook for revenues and organic vs. inorganic growth - Management indicated that most growth would be organic, around 3.6%, with non-organic growth at about 4.2% [19] Question: Digital imaging margins and future opportunities - Digital imaging margins in Q4 were around 24%, with expectations to improve to about 23.4% in 2026 [20] Question: Defense awards and their contribution - The Tranche 3 Tracking Layer program is expected to contribute over $100 million over the next few years [27] Question: Book-to-bill ratio in main segments - The book-to-bill ratio for instrumentation is about 1, digital imaging is 1.06, and aerospace and defense is 1.25 [31] Question: Demand drivers in test and measurement - High-end specialty oscilloscopes are performing well, particularly in the auto market and data centers [58]