THOUSAND OAKS, Calif. — (BUSINESS WIRE) — October 23, 2019 — Teledyne Technologies Incorporated (NYSE: TDY):

• Record quarterly sales of $802.2 million, an increase of 10.6% compared to last year
• Record quarterly GAAP earnings per diluted share of $2.84, an increase of 16.9% compared to last year
• Record cash flow
• Record third quarter operating margin
• Raising full year 2019 GAAP earnings outlook to $10.37 to $10.42 per diluted share, an increase from the prior outlook of $9.86 to $9.96
• Completed acquisition of the Gas and Flame Detection business of 3M
• Acquired Micralyne Inc.

Teledyne today reported third quarter 2019 net sales of $802.2 million, compared with net sales of $725.3 million for the third quarter of 2018, an increase of 10.6%. Net income was $106.7 million ($2.84 per diluted share) for the third quarter of 2019, compared with $90.3 million ($2.43 per diluted share) for the third quarter of 2018, an increase of 18.2%. The third quarter of 2019 reflected net discrete income tax benefits of $10.4 million compared with net discrete income tax benefits of $11.4 million for the third quarter of 2018. The third quarter of 2019 included $0.3 million in severance and facility consolidation costs compared with $4.1 million in severance and facility consolidation costs for the third quarter of 2018.

“Once again, we achieved all-time record sales, earnings per share and cash flow for any quarterly period,” said Robert Mehrabian, Executive Chairman. “Due to our greater emphasis on margin improvement, operating margin increased 150 basis points over last year. We also closed two acquisitions in the quarter, including the quick completion of the Gas and Flame Detection business of 3M. In fact, each of our two 2019 corporate carve-out acquisitions were closed within two months of announcement.” Al Pichelli, President and Chief Executive Officer, added, “Teledyne continued to benefit from our balanced business portfolio. Strong sales of defense electronics and advanced detectors for medical imaging, as well as a recovery in marine instrumentation, helped generate total company organic growth of approximately five percent. In addition, given recent acquisitions, every segment reported double-digit sales growth.”

Review of Operations

Comparisons are with the third quarter of 2018, unless noted otherwise. In the third quarter of 2019, we realigned the reporting structure for certain business units, primarily related to certain refinements of our management reporting structure. This change primarily related to moving certain electronic manufacturing services products from the Aerospace and Defense Electronics segment to the Engineered Systems segment. Total net sales for these products were $76.2 million for fiscal year 2018. Other immaterial changes included moving certain United Kingdom (U.K.) microwave product lines (previously within the Digital Imaging segment) and certain U.K. manufactured composite parts (previously within the Engineered Systems segment) into the Aerospace and Defense Electronics segment. Total net sales for these U.K. product lines were less than $20.0 million for fiscal year 2018. Previously reported segment data has been adjusted to reflect these changes.

Instrumentation

The Instrumentation segment’s third quarter 2019 net sales were $282.9 million, compared with $256.2 million, an increase of 10.4%. Operating income was $52.0 million for the third quarter of 2019, compared with $35.7 million, an increase of 45.7%.

The third quarter 2019 net sales increase resulted from higher sales of environmental instrumentation, marine instrumentation and test and measurement instrumentation. Sales of environmental instrumentation increased $17.1 million, sales of marine instrumentation increased $8.2 million and sales of test and measurement instrumentation increased $1.4 million. The increase in sales in environmental instrumentation included $17.3 million in sales from the acquisition of the Gas and Flame Detection business of 3M. The increase in operating income reflected the impact of higher sales and higher margins across most product lines. The third quarter of 2019 included $0.1 million in severance and facility consolidation costs compared with $3.2 million in severance and facility consolidation costs for the third quarter of 2018.

Digital Imaging

The Digital Imaging segment’s third quarter 2019 net sales were $244.0 million, compared with $220.7 million, an increase of 10.6%. Operating income was $41.2 million for the third quarter of 2019, compared with $42.3 million, a decrease of 2.6%.

The third quarter 2019 net sales primarily reflected higher sales of X-ray detectors for life sciences applications and aerospace, defense and MEMS products, as well as $23.5 million in sales from the acquisitions of the scientific imaging businesses of Roper Technologies, Inc. and Micralyne Inc., partially offset by lower sales of industrial machine vision products. The decrease in operating income in the third quarter of 2019 primarily reflected product mix differences.

Aerospace and Defense Electronics

The Aerospace and Defense Electronics segment’s third quarter 2019 net sales were $177.1 million, compared with $160.3 million, an increase of 10.5%. Operating income was $39.5 million for the third quarter of 2019, compared with $33.0 million, an increase of 19.7%.

The third quarter 2019 net sales reflected $20.8 million of higher sales of defense electronics, partially offset by lower sales of $4.0 million for aerospace electronics. The increase in operating income in the third quarter of 2019 reflected the impact of higher sales and improved margins.

Engineered Systems

The Engineered Systems segment’s third quarter 2019 net sales were $98.2 million compared with $88.1 million, an increase of 11.5%. Operating income was $10.6 million for the third quarter of 2019, compared with $9.6 million, an increase of 10.4%.

The third quarter 2019 net sales reflected higher sales of $9.3 million of engineered products and services and higher sales of $1.6 million for turbine engines, partially offset by lower sales of $0.8 million of energy systems. The higher sales of engineered products and services primarily reflected increased sales for marine manufacturing, missile defense and space programs, as well as electronic manufacturing services products. Operating income in the third quarter of 2019 increased primarily due to higher sales.

Additional Financial Information

Cash Flow

Cash provided by operating activities was $150.9 million for the third quarter of 2019, compared with $141.9 million. The higher cash provided by operating activities in the third quarter of 2019 reflected the impact of higher operating income and cash flow from recent acquisitions, partially offset by higher income tax payments. At September 29, 2019, cash totaled $128.5 million compared with $142.5 million at December 30, 2018. At September 29, 2019, total debt was $925.4 million, compared with $747.5 million at December 30, 2018. At September 29, 2019, $225.0 million was outstanding under the $750.0 million credit facility. The company received $8.5 million from the exercise of stock options in the third quarter of 2019, compared with $12.3 million. Capital expenditures for the third quarter of 2019 were $25.1 million, compared with $20.9 million. Depreciation and amortization expense for the third quarter of 2019 was $27.9 million, compared with $27.3 million. On August 1, 2019, Teledyne acquired the Gas and Flame Detection business of 3M for $230.0 million in cash. On August 30, 2019, Teledyne acquired Micralyne Inc. for $25.0 million in cash.