THOUSAND OAKS, Calif. — (BUSINESS WIRE) — April 22, 2020 — Teledyne Technologies Incorporated (NYSE: TDY):

• Record first quarter sales of $784.6 million, an increase of 5.3% compared to last year
• Record first quarter GAAP diluted earnings per share of $2.17, an increase of 7.4% compared to last year
• Record first quarter GAAP operating margin
• Adjusting full year 2020 GAAP diluted earnings per share outlook to $9.30 to $10.00, a decrease from the prior outlook of $11.20 to $11.30
• Acquired OakGate Technology, Inc.

Teledyne today reported first quarter 2020 net sales of $784.6 million, compared with net sales of $745.2 million for the first quarter of 2020, an increase of 5.3%. Net income was $82.2 million ($2.17 diluted earnings per share) for the first quarter of 2020, compared with $75.3 million ($2.02 diluted earnings per share) for the first quarter of 2019, an increase of 9.2%. The first quarter of 2020 included $10.4 million in severance, facility consolidation, acquisition and certain contract adjustment costs compared with $2.4 million in severance, facility consolidation, and acquisition costs for the first quarter of 2019. The first quarter of 2020 reflected net discrete income tax benefits of $4.2 million compared with net discrete income tax benefits of $3.1 million for the first quarter of 2019.

“Our first priority remains the health and safety of our employees and their families. Up to 40% of our total personnel continue to work from home, and within our manufacturing operations, we are maintaining social distancing and other necessary protocols. Given the challenging operating environment, we are especially pleased to report that Teledyne achieved both record first quarter sales and GAAP diluted earnings per share,” said Robert Mehrabian, Executive Chairman. “Sales of $784.6 million increased 5.3% and included positive organic growth. Likewise, GAAP earnings per share and GAAP operating margin increased despite substantial charges taken in the first quarter. Teledyne’s business portfolio remains exceptionally well-balanced across end markets and geographies. In addition, approximately one half of our businesses are longer-cycle, more predictable and supported by record quarter-end backlog. Nevertheless, our current lower and wider earnings outlook range is a result of the highly uncertain environment. Teledyne’s balance sheet is exceptionally strong, with over $230 million of cash and cash equivalents and more than $600 million available under our credit facility maturing in 2024. Given our ample liquidity and the resilience of our business portfolio, we continue to review and pursue acquisition opportunities.”

Review of Operations

Comparisons are with the first quarter of 2019, unless noted otherwise.

Instrumentation

The Instrumentation segment’s first quarter 2020 net sales were $285.1 million, compared with $256.5 million, an increase of 11.2%. Operating income was $50.8 million for the first quarter of 2020, compared with $39.9 million, an increase of 27.3%.

The first quarter 2020 net sales increase resulted from higher sales of environmental instrumentation, marine instrumentation and test and measurement instrumentation. Sales of environmental instrumentation increased $22.9 million and sales of marine instrumentation increased $4.1 million, while sales of test and measurement instrumentation increased $1.6 million, which included $2.1 million in sales from the acquisition of OakGate. The increase in sales in environmental instrumentation included $25.9 million in sales from the 2019 acquisition of the gas and flame detection businesses. The increase in operating income reflected the impact of higher sales and higher margins across most product lines, partially offset by $0.9 million in severance and acquisition costs.

Digital Imaging

The Digital Imaging segment’s first quarter 2020 net sales were $246.7 million, compared with $232.4 million, an increase of 6.2%. Operating income was $43.8 million for the first quarter of 2020, compared with $36.6 million, an increase of 19.7%.

The first quarter 2020 net sales primarily reflected higher sales of infrared detectors for defense applications, MEMS products and X-ray detectors for life sciences applications, as well as $8.8 million in incremental sales from recent 2019 acquisitions. The increase in operating income in the first quarter of 2020 primarily reflected the impact of higher sales and product mix differences.

Aerospace and Defense Electronics

The Aerospace and Defense Electronics segment’s first quarter 2020 net sales were $156.3 million, compared with $166.6 million, a decrease of 6.2%. Operating income was $13.4 million for the first quarter of 2020, compared with $32.5 million a decrease of 58.8%.

The first quarter 2020 net sales reflected $20.1 million of lower sales for aerospace electronics, partially offset by higher sales of $9.8 million for defense electronics. The weakness in the commercial aerospace industry has negatively affected sales of aerospace electronics. Operating income in the first quarter of 2020 reflected the impact of lower sales and $8.2 million of severance, facility consolidation and certain contract adjustment costs.

Engineered Systems

The Engineered Systems segment’s first quarter 2020 net sales were $96.5 million compared with $89.7 million, an increase of 7.6%. Operating income was $11.4 million for the first quarter of 2020, compared with $6.4 million, an increase of 78.1%.

The first quarter 2020 net sales reflected higher sales of $3.7 for turbine engines, $2.8 million of engineered products and $0.3 million of energy systems. The higher sales of turbine engines reflected increase sales for Harpoon missile programs. The higher sales of engineered products and services primarily reflected increased sales from marine, space and nuclear programs, as well as electronic manufacturing services products, partially offset by lower sales from missile defense programs. The increase in operating income in the first quarter of 2020 reflected higher sales and greater mix of manufacturing programs.

Additional Financial Information

Cash Flow

Cash provided by operating activities was $76.4 million for the first quarter of 2020, compared with $80.1 million. The decrease in cash provided by operating activities in the first quarter of 2020 was impacted by the timing of accounts receivable collections, partially offset by the impact of higher operating income, lower income tax payments and cash flow from recent acquisitions. At March 29, 2020, cash and cash equivalents totaled $231.4 million compared with $199.5 million at December 29, 2019. At March 29, 2020, total debt was $849.7 million, compared with $850.6 million at December 29, 2019. At March 29, 2020, $125.0 million was outstanding under the $750.0 million credit facility. The company received $10.2 million from the exercise of stock options in both the first quarter of 2020 and 2019. Capital expenditures for the first quarter of 2020 were $20.2 million, compared with $21.3 million. Depreciation and amortization expense for the first quarter of 2020 was $29.3 million, compared with $27.6 million. On January 3, 2020, Teledyne acquired OakGate Technology, Inc. for $28.4 million in cash, net of cash acquired.