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

• Sales of $743.3 million and GAAP diluted earnings per share of $2.48
• GAAP operating margin of 14.8%, including $8.6 million of pretax charges
• Record second quarter cash from operations of $155.8 million
• Affirming and narrowing full year 2020 GAAP diluted earnings per share outlook to $9.45 to $10.00, compared with the prior outlook of $9.30 to $10.00

Teledyne today reported second quarter 2020 net sales of $743.3 million, compared with net sales of $782.0 million for the second quarter of 2019, a decrease of 4.9%. Net income was $93.7 million ($2.48 diluted earnings per share) for the second quarter of 2020, compared with $104.6 million ($2.80 diluted earnings per share) for the second quarter of 2019, a decrease of 10.4%. The second quarter of 2020 included $8.6 million in severance, facility consolidation and acquisition costs compared with $1.3 million in severance, facility consolidation and acquisition costs for the second quarter of 2019. The second quarter of 2020 reflected net discrete income tax benefits of $10.4 million compared with net discrete income tax benefits of $4.3 million for the second quarter of 2019.

“Despite record economic contraction and a challenging operating environment for manufacturers, Teledyne performed extremely well in the second quarter. Our decrease in sales was limited to approximately 5% compared with both last year and the first quarter of 2020. However, overall GAAP operating margin increased sequentially 150 basis points even with $8.6 million of pretax charges,” said Robert Mehrabian, Executive Chairman. “We have aggressively cut costs to protect profitability in our shorter-cycle business, while at the same time continuing margin improvement actions in our operations with strong backlog. Furthermore, we achieved record cash flow for any second quarter period. Much uncertainty remains in 2020, and we do not know the pace of recovery in all of our industrial businesses. Nevertheless, given our strong execution and lower cost structure, as well as our very healthy balance sheet, we are well-positioned to continue compounding earnings and cash flow for quarters and years to come.”

Review of Operations

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

Instrumentation

The Instrumentation segment’s second quarter 2020 net sales were $263.1 million, compared with $264.1 million, a decrease of 0.4%. Operating income was $48.5 million for the second quarter of 2020, compared with $49.0 million, a decrease of 1.0%.

The second quarter 2020 net sales decrease resulted from lower sales of marine instrumentation and test and measurement instrumentation, mostly offset by higher sales of environmental instrumentation. Sales of environmental instrumentation increased $6.9 million, sales of test and measurement instrumentation decreased $6.4 million and sales of marine instrumentation decreased $1.5 million. Environmental instrumentation included $21.7 million in sales from the 2019 acquisition of the gas and flame detection businesses. Test and measurement instrumentation included $4.8 million in sales from the 2020 acquisition of OakGate Technology, Inc. Operating income included $2.8 million in higher severance and facility consolidation costs, partially offset by improved product line margins.

Digital Imaging

The Digital Imaging segment’s second quarter 2020 net sales were $237.6 million, compared with $248.4 million, a decrease of 4.3%. Operating income was $46.8 million for the second quarter of 2020, compared with $51.6 million, a decrease of 9.3%.

The second quarter 2020 net sales primarily reflected lower sales of X-ray products for dental and medical applications and geospatial imaging products, partially offset by greater sales of infrared detectors for defense applications and $3.0 million in incremental sales from a 2019 acquisition. The decrease in operating income in the second quarter of 2020 primarily reflected the impact of lower sales.

Aerospace and Defense Electronics

The Aerospace and Defense Electronics segment’s second quarter 2020 net sales were $143.1 million, compared with $176.0 million, a decrease of 18.7%. Operating income was $17.5 million for the second quarter of 2020, compared with $38.6 million a decrease of 54.7%.

The second quarter 2020 net sales reflected $26.9 million of lower sales for aerospace electronics, and lower sales of $6.0 million for defense and space electronics. The continued weakness in the commercial aerospace industry has negatively affected sales of aerospace electronics. Reduced sales of defense and space electronics resulted from the OneWeb program. Operating income in the second quarter of 2020 reflected the impact of lower sales and $4.9 million in higher severance and facility consolidation costs.

Engineered Systems

The Engineered Systems segment’s second quarter 2020 net sales were $99.5 million compared with $93.5 million, an increase of 6.4%. Operating income was $10.8 million for the second quarter of 2020, compared with $9.0 million, an increase of 20.0%.

The second quarter 2020 net sales reflected higher sales of $5.8 million of engineered products and $1.5 million for turbine engines, partially offset by lower sales of $1.3 million of energy systems. The higher sales of engineered products and services primarily reflected increased sales from marine, nuclear and other manufacturing programs, as well as electronic manufacturing services products. Turbine engine sales reflected greater sales of Harpoon missile engines. The increase in operating income in the second quarter of 2020 reflected the impact of higher sales and a greater mix of manufacturing programs.

Additional Financial Information

Cash Flow

Cash provided by operating activities was $155.8 million for the second quarter of 2020, compared with $83.2 million. The increase in cash provided by operating activities in the second quarter of 2020 reflected improved collection of accounts receivable and $33.4 million of deferred tax payments, partially offset by lower operating income. At June 28, 2020, cash and cash equivalents totaled $382.8 million compared with $199.5 million at December 29, 2019. At June 28, 2020, total debt was $851.4 million, compared with $850.6 million at December 29, 2019. At June 28, 2020, $125.0 million was outstanding under the $750.0 million credit facility. Available borrowing capacity under the $750.0 million credit facility, which is reduced by borrowings and certain outstanding letters of credit, was $614.5 million at June 28, 2020. The company received $18.0 million from the exercise of stock options in the second quarter of 2020 compared with $10.5 million. Capital expenditures for the second quarter of 2020 were $16.6 million, compared with $18.1 million. Depreciation and amortization expense for the second quarter of 2020 was $29.0 million, compared with $27.1 million.