Teledyne Technologies Incorporated (NYSE:TDY):
- Orders of $1,433.2 million, an increase of 7.8% compared
with last year
- Sales of $1,350.1 million
- First quarter GAAP operating margin of 17.4% and record
first quarter non-GAAP operating margin of 21.2%
- GAAP diluted earnings per share of $3.72 and record first
quarter non-GAAP diluted earnings per share of $4.55
- Record first quarter cash from operations of $291.0 million
and all-time record free cash flow of $275.1 million
- Revising full year 2024 GAAP diluted earnings per share
outlook to $16.02 to $16.27, compared with the prior outlook of
$17.15 to $17.53, and revising full year 2024 non-GAAP earnings per
share outlook to $19.25 to $19.45, compared with the prior outlook
of $20.35 to $20.68
- Announced pending acquisition of Adimec Holdings
B.V.
- Recently completed acquisition of Valeport on April 10,
2024
- Consolidated Leverage Ratio improved to 1.7x
- Further reduction in gross debt with a $450 million debt
maturity payment made after quarter-end on April 1, 2024
- Planned capital deployment to include stock repurchases of
approximately $250.0 to $300.0 million under the company’s new
authorization
Teledyne today reported first quarter 2024 net sales of $1,350.1
million, compared with net sales of $1,383.3 million for the first
quarter of 2023, a decrease of 2.4%. Net income attributable to
Teledyne was $178.5 million ($3.72 diluted earnings per share) for
the first quarter of 2024, compared with $178.7 million ($3.73
diluted earnings per share) for the first quarter of 2023, a
decrease of 0.1%. The first quarter of 2024 included $49.4 million
of pretax acquired intangible asset amortization expense, $2.2
million of pretax FLIR integration costs and $0.3 million of
acquisition related discrete income tax expense. Excluding these
items, non-GAAP net income attributable to Teledyne for the first
quarter of 2024 was $218.3 million ($4.55 diluted earnings per
share). The first quarter of 2023 included $49.7 million of pretax
acquired intangible asset amortization expense and $0.3 million of
acquisition related discrete income tax expense. Excluding these
items, non-GAAP net income attributable to Teledyne for the first
quarter of 2023 was $217.2 million ($4.53 diluted earnings per
share). Operating margin was 17.4% for the first quarter of 2024,
compared with 17.5% for the first quarter of 2023. Excluding the
non-GAAP items discussed above, non-GAAP operating margin for the
first quarter of 2024 was 21.2%, compared with 21.1% for the first
quarter of 2023.
“We achieved record first quarter non-GAAP operating margin,
adjusted earnings per share and free cash flow,” said Robert
Mehrabian, Executive Chairman. “While overall orders remained
strong, sales were impacted by deterioration in some of our shorter
cycle imaging and instrumentation markets. We had previously
assumed no full year sales growth in industrial automation as well
as test and measurement markets. However, those markets weakened
more than planned in the first quarter, and we now forecast full
year sales in those product families to decline meaningfully in
2024. Nevertheless, we believe such sales declines will be offset
by our marine, aviation and certain defense businesses resulting in
flat full year sales compared with 2023. Despite those anticipated
sales reductions in what are among our highest margin businesses,
we believe overall operating margin will remain flat. For example,
driven by organic growth and strong margin improvement at Teledyne
FLIR, we were able to protect first quarter operating margin in the
Digital Imaging segment despite a significant year-over-year
reduction in sales related to industrial automation. Finally, given
our even stronger balance sheet and record free cash flow, we
believe it is an opportunistic time to add stock repurchases to our
capital deployment plans.”
Review of Operations
Comparisons are with the first quarter of 2023, unless noted
otherwise.
Digital Imaging
The Digital Imaging segment’s first quarter 2024 net sales were
$740.8 million, compared with $772.5 million, a decrease of 4.1%.
Operating income was $113.8 million for the first quarter of 2024,
compared with $122.2 million, a decrease of 6.9%. The first quarter
of 2024 included $2.2 million of pretax FLIR integration costs, and
there were no comparable costs in the first quarter of 2023.
Acquired intangible amortization expense for both the first quarter
of 2024 and 2023 was $45.8 million. Excluding these items, non-GAAP
operating income for the first quarter of 2024 was $161.8 million,
compared with $168.0 million, a decrease of 3.7%.
The first quarter of 2024 net sales decreased primarily due to
lower sales of industrial imaging cameras and
micro-electro-mechanical systems (“MEMS”), partially offset by
higher sales of infrared detectors and subsystems as well as
unmanned systems. The decrease in operating income was primarily
due to lower sales and unfavorable product mix.
Instrumentation
The Instrumentation segment’s first quarter 2024 net sales were
$330.4 million, compared with $333.5 million, a decrease of 0.9%.
Operating income was $86.0 million for the first quarter of 2024,
compared with $80.7 million, an increase of 6.6%.
The first quarter of 2024 net sales decrease resulted from a
$15.9 million decrease in sales of test and measurement
instrumentation as well as a $6.8 million decrease in sales of
environmental instrumentation, partially offset by a $19.6 million
increase in sales of marine instrumentation. The increase in
operating income primarily reflected the impact of higher marine
instrumentation sales and improved marine instrumentation product
margins.
Aerospace and Defense Electronics
The Aerospace and Defense Electronics segment’s first quarter
2024 net sales were $185.7 million, compared with $173.2 million,
an increase of 7.2%. Operating income was $51.9 million for the
first quarter of 2024, compared with $47.0 million, an increase of
10.4%.
The first quarter of 2024 net sales reflected higher sales of
$10.1 million for aerospace electronics and $2.4 million for
defense electronics. The increase in operating income primarily
reflected the impact of a higher percentage of segment sales being
aerospace electronics, which has higher product margins.
Engineered Systems
The Engineered Systems segment’s first quarter 2024 net sales
were $93.2 million, compared with $104.1 million, a decrease of
10.5%. Operating income was $2.7 million for the first quarter of
2024, compared with $10.0 million, a decrease of 73.0%.
The first quarter of 2024 net sales reflected lower sales of
$10.1 million for engineered products and $0.8 million for energy
systems. The lower sales for engineered products primarily
reflected decreased sales from defense and maritime programs. The
decrease in operating income was primarily driven by program mix
and unfavorable estimate changes related to electronic
manufacturing services contracts.
Additional Financial Information
Cash Flow
Cash provided by operating activities was $291.0 million for the
first quarter of 2024 compared with $203.0 million, with the
increase driven by stronger working capital performance in the
first quarter of 2024. Depreciation and amortization expense for
the first quarter of 2024 was $78.0 million compared with $82.1
million. Stock-based compensation expense for the first quarter of
2024 was $12.0 million compared with $7.9 million, with the
increase related to timing of grants, including certain grants that
were fully expensed in the first quarter of 2024.
Capital expenditures for the first quarter of 2024 were $15.9
million compared with $24.4 million. Teledyne received $9.1 million
from the exercise of stock options in the first quarter of 2024
compared with $10.2 million.
As of March 31, 2024, net debt was $2,333.9 million which is
calculated as total debt of $3,246.3 million, net of cash and cash
equivalents of $912.4 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. Subsequent to
the end of the quarter, the Company made a $450 million debt
maturity payment.
As of March 31, 2024, $1,128.2 million was available under the
$1.15 billion credit facility, after reductions of $21.8 million in
outstanding letters of credit.
First Quarter
Free Cash Flow
2024
2023
Cash provided by operating activities
$
291.0
$
203.0
Capital expenditures for property, plant
and equipment
(15.9
)
(24.4
)
Free cash flow
275.1
178.6
Income Taxes
The effective tax rate for the first quarter of 2024 was 20.6%,
compared with 20.1%. The first quarter of 2024 reflected net
discrete income tax benefits of $4.4 million compared with $6.6
million. Excluding the net discrete income tax items in both
periods, the effective tax rates would have been 22.5% for the
first quarter of 2024, compared with 23.0%.
Other
Corporate expense was $20.1 million for the first quarter of
2024 compared with $17.4 million, with the increase driven
primarily by higher compensation cost, including higher stock-based
compensation expenses. Non-service retirement benefit income was
$2.7 million for the first quarter of 2024 compared with $3.3
million. Interest expense, net of interest income, was $12.7
million for the first quarter of 2024 compared with $21.0 million.
The decrease was due to reduced outstanding borrowings with lower
weighted average interest rates compared to the first quarter of
2023.
Outlook
Based on its current outlook, the company’s management believes
that second quarter 2024 GAAP diluted earnings per share will be in
the range of $3.57 to $3.70 and full year 2024 GAAP diluted
earnings per share will be in the range of $16.02 to $16.27. The
company’s management further believes that second quarter 2024
non-GAAP diluted earnings per share will be in the range of $4.40
to $4.50 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
acquisition-related tax matters. The company’s annual expected tax
rate for 2024 is 22.5%, before discrete tax items.
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 stock-based compensation expense, tax rates,
anticipated capital expenditures, stock repurchases, and 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 first quarter earnings conference
call will be held at 11:00 a.m. (Eastern) on Wednesday, April 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, April 24, 2024.
TELEDYNE TECHNOLOGIES
INCORPORATED
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
FOR THE FIRST QUARTER
ENDED
MARCH 31, 2024 AND APRIL 2,
2023
(Unaudited - in millions, except
per share amounts)
First Quarter
First Quarter
2024
2023
Net sales
$
1,350.1
$
1,383.3
Costs and expenses:
Costs of sales
770.2
790.7
Selling, general and administrative
296.2
300.4
Acquired intangible asset amortization
49.4
49.7
Total costs and expenses
1,115.8
1,140.8
Operating income (loss)
234.3
242.5
Interest and debt income (expense),
net
(12.7
)
(21.0
)
Non-service retirement benefit income
(expense), net
2.7
3.3
Other income (expense), net
1.2
(1.1
)
Income (loss) before income taxes
225.5
223.7
Provision (benefit) for income taxes
46.4
44.9
Net income (loss) including noncontrolling
interest
179.1
178.8
Less: Net income (loss) attributable to
noncontrolling interest
0.6
0.1
Net income (loss) attributable to
Teledyne
$
178.5
$
178.7
Diluted earnings per common share
$
3.72
$
3.73
Weighted average diluted common shares
outstanding
48.0
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 FIRST QUARTER
ENDED
MARCH 31, 2024 AND APRIL 2,
2023
(Unaudited - $ in millions)
First Quarter
First Quarter
% Change
2024
2023
Net sales:
Digital Imaging
$
740.8
$
772.5
(4.1
)%
Instrumentation
330.4
333.5
(0.9
)%
Aerospace and Defense Electronics
185.7
173.2
7.2
%
Engineered Systems
93.2
104.1
(10.5
)%
Total net sales
$
1,350.1
$
1,383.3
(2.4
)%
Operating income (loss):
Digital Imaging
$
113.8
$
122.2
(6.9
)%
Instrumentation
86.0
80.7
6.6
%
Aerospace and Defense Electronics
51.9
47.0
10.4
%
Engineered Systems
2.7
10.0
(73.0
)%
Corporate expense
(20.1
)
(17.4
)
15.5
%
Operating income (loss)
234.3
242.5
(3.4
)%
Interest and debt income (expense),
net
(12.7
)
(21.0
)
(39.5
)%
Non-service retirement benefit income
(expense), net
2.7
3.3
(18.2
)%
Other income (expense), net
1.2
(1.1
)
*
Income (loss) before income taxes
225.5
223.7
0.8
%
Provision (benefit) for income taxes
46.4
44.9
3.3
%
Net income (loss) including noncontrolling
interest
179.1
178.8
0.2
%
Less: Net income (loss) attributable to
noncontrolling interest
0.6
0.1
*
Net income (loss) attributable to
Teledyne
$
178.5
$
178.7
(0.1
)%
* not meaningful
This condensed consolidated financial statement was prepared in
accordance with U.S. GAAP.
TELEDYNE TECHNOLOGIES
INCORPORATED
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited – in millions)
March 31, 2024
December 31, 2023
ASSETS
Cash and cash equivalents
$
912.4
$
648.3
Accounts receivable and unbilled
receivables, net
1,182.7
1,202.1
Inventories, net
933.2
917.7
Prepaid expenses and other current
assets
195.3
213.3
Total current assets
3,223.6
2,981.4
Property, plant and equipment, net
760.0
777.0
Goodwill and acquired intangible assets,
net
10,163.1
10,280.9
Prepaid pension assets
207.4
203.3
Other assets, net
285.1
285.3
Total assets
$
14,639.2
$
14,527.9
LIABILITIES AND EQUITY
Accounts payable
$
409.0
$
384.7
Accrued liabilities
767.6
781.3
Current portion of long-term debt
600.2
600.1
Total current liabilities
1,776.8
1,766.1
Long-term debt, net of current portion
2,646.1
2,644.8
Other long-term liabilities
883.1
891.2
Total liabilities
5,306.0
5,302.1
Redeemable noncontrolling interest
5.2
4.6
Total stockholders’ equity
9,328.0
9,221.2
Total liabilities and equity
$
14,639.2
$
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 FIRST QUARTER ENDED
MARCH 31, 2024 AND APRIL 2, 2023
(Unaudited - in millions, except
per share amounts)
First Quarter 2024
First 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
$
225.5
$
178.5
$
3.72
$
223.7
$
178.7
$
3.73
Adjusted for specified items:
FLIR integration costs
2.2
1.7
0.03
—
—
—
Acquired intangible asset amortization
49.4
37.8
0.79
49.7
38.2
0.79
Acquisition-related tax matters
—
0.3
0.01
—
0.3
0.01
Non-GAAP
$
277.1
$
218.3
$
4.55
$
273.4
$
217.2
$
4.53
First Quarter 2024
First Quarter 2023
Operating
income (loss)
Operating
margin
Operating
income (loss)
Operating
margin
GAAP
$
234.3
17.4
%
$
242.5
17.5
%
Adjusted for specified items:
FLIR integration costs
2.2
—
Acquired intangible asset amortization
49.4
49.7
Non-GAAP
$
285.9
21.2
%
$
292.2
21.1
%
First Quarter 2024
GAAP
Operating
Income (loss)
Acquired
intangible
asset
amortization
FLIR
integration
costs
Non-GAAP
Operating
Income (loss)
Digital Imaging
$
113.8
$
45.8
$
2.2
$
161.8
Instrumentation
86.0
3.4
—
89.4
Aerospace and Defense Electronics
51.9
0.2
—
52.1
Engineered Systems
2.7
—
—
2.7
Corporate expense
(20.1
)
—
—
(20.1
)
Total
$
234.3
$
49.4
$
2.2
$
285.9
First Quarter 2023
GAAP
Operating
Income (loss)
Acquired
intangible
asset
amortization
FLIR
integration
costs
Non-GAAP
Operating
Income (loss)
Digital Imaging
$
122.2
$
45.8
$
—
$
168.0
Instrumentation
80.7
3.7
—
84.4
Aerospace and Defense Electronics
47.0
0.2
—
47.2
Engineered Systems
10.0
—
—
10.0
Corporate expense
(17.4
)
—
—
(17.4
)
Total
$
242.5
$
49.7
$
—
$
292.2
TELEDYNE TECHNOLOGIES
INCORPORATED
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES
(Unaudited - in millions)
March 31, 2024
December 31, 2023
Current portion of long-term debt
$
600.2
$
600.1
Long-term debt
2,646.1
2,644.8
Total debt - non-GAAP
3,246.3
3,244.9
Less cash and cash equivalents
(912.4
)
(648.3
)
Net debt - non-GAAP
$
2,333.9
$
2,596.6
Second Quarter 2024
Twelve Months 2024
Low
High
Low
High
GAAP Diluted Earnings Per Common Share
Outlook
$
3.57
$
3.70
$
16.02
$
16.27
Adjusted for specified items:
FLIR integration costs
0.02
0.01
0.05
0.04
Acquired intangible asset amortization
0.81
0.79
3.18
3.14
Non-GAAP Diluted Earnings Per Common
Share Outlook
$
4.40
$
4.50
$
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 first 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
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.
- 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.
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version on businesswire.com: https://www.businesswire.com/news/home/20240424706648/en/
Jason VanWees (805) 373-4542
Teledyne Technologies (NYSE:TDY)
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