THOUSAND OAKS, Calif. — (BUSINESS WIRE) — January 27, 2021 — Teledyne Technologies Incorporated (NYSE: TDY):

• Fourth quarter sales of $809.3 million
• All-time record GAAP diluted earnings per share of $3.48, an increase of 13.7% compared with last year
• All-time record GAAP operating margin of 17.8%, an increase of 173 bps from last year
• Record quarterly and full year cash from operations of $236.4 million and $618.9 million, respectively
• Announced pending acquisition of FLIR Systems, Inc. for approximately $8.0 billion
• Issuing full year 2021 diluted earnings per share outlook of $11.25 to $11.45, which does not reflect the pending acquisition of FLIR and related acquisition and financing costs

Teledyne today reported fourth quarter 2020 net sales of $809.3 million, compared with net sales of $834.2 million for the fourth quarter of 2019, a decrease of 3.0%. Net income was $132.1 million ($3.48 diluted earnings per share) for the fourth quarter of 2020, compared with $115.7 million ($3.06 diluted earnings per share) for the fourth quarter of 2019, an increase of 14.2%. The fourth quarter of 2020 included $10.4 million in severance, facility consolidation, acquisition and other costs compared with $3.1 million in severance, facility consolidation, acquisition and other costs for the fourth quarter of 2019. The fourth quarter of 2020 reflected net discrete income tax benefits of $18.8 million compared with net discrete income tax benefits of $8.3 million for the fourth quarter of 2019.

“We concluded 2020 with the best earnings, operating margin and cash flow in the company’s history,” said Robert Mehrabian, Executive Chairman. “Given record quarterly and full year free cash flow of $217.0 million and $547.5 million, respectively, we ended the year with only $105.4 million of net debt. For over two decades, we have consistently and predictably compounded earnings and cash flow. Nevertheless, I have never been more excited about Teledyne’s future. On the first day of fiscal 2021, we announced the pending acquisition of FLIR for $8.0 billion. Across digital imaging and unmanned systems, FLIR will add uniquely complementary technologies, products, customers and applications to Teledyne’s proven business model.”

Full Year 2020

Total year sales for 2020 were $3,086.2 million, compared with $3,163.6 million for 2019, a decrease of 2.4%. Net income was $401.9 million ($10.62 per diluted share) for fiscal year 2020, compared with $402.3 million ($10.73 per diluted share) for fiscal year 2019, a decrease of 0.1%.

Total year 2020 and 2019 also reflected pretax charges totaling $33.3 million and $8.8 million, respectively, in severance, facility consolidation, acquisition and other costs. Net income for 2020 included net discrete tax benefits of $34.6 million, compared with $26.1 million for 2019.

Review of Operations

Comparisons are with the fourth quarter of 2019, unless noted otherwise. The fourth quarter of 2020 contained 14 weeks and the fourth quarter of 2019 contained 13 weeks.

Instrumentation

The Instrumentation segment’s fourth quarter 2020 net sales were $282.8 million, compared with $301.6 million, a decrease of 6.2%. Operating income was $63.2 million for the fourth quarter of 2020, compared with $59.5 million, an increase of 6.2%.

The fourth quarter 2020 net sales decrease resulted from lower sales of marine instrumentation and environmental instrumentation, partially offset by higher sales of test and measurement instrumentation. Sales of marine instrumentation decreased $13.6 million and environmental instrumentation decreased $7.7 million. Sales of test and measurement instrumentation increased $2.5 million and included $4.8 million in sales from the 2020 acquisition of OakGate Technology, Inc. The increase in operating income in the fourth quarter of 2020 primarily reflected favorable product mix. Operating income in the fourth quarter of 2020 included $2.6 million in severance, facility consolidation, acquisition and other costs compared with $1.4 million in severance, facility consolidation, acquisition and other costs for the fourth quarter of 2019.

Digital Imaging

The Digital Imaging segment’s fourth quarter 2020 net sales were $262.0 million, compared with $268.1 million, a decrease of 2.3%. Operating income was $56.7 million for the fourth quarter of 2020, compared with $47.1 million, an increase of 20.4%.

The fourth quarter 2020 net sales primarily reflected lower sales of X-ray detectors for dental and medical imaging, partially offset by greater sales of infrared and visible detectors for space applications. The increase in operating income in the fourth quarter of 2020 primarily reflected improved margins across most product categories.

Aerospace and Defense Electronics

The Aerospace and Defense Electronics segment’s fourth quarter 2020 net sales were $145.2 million, compared with $170.4 million, a decrease of 14.8%. Operating income was $23.2 million for the fourth quarter of 2020, compared with $32.8 million a decrease of 29.3%.

The fourth quarter 2020 net sales reflected $22.2 million of lower sales for aerospace electronics and lower sales of $3.0 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 lower commercial space sales. Operating income in the fourth quarter of 2020 reflected the impact of lower sales. Operating income in the fourth quarter of 2020 included $5.8 million in severance, facility consolidation and other costs compared with $0.1 million in severance, facility consolidation and other costs for the fourth quarter of 2019.

Engineered Systems

The Engineered Systems segment’s fourth quarter 2020 net sales were $119.3 million compared with $94.1 million, an increase of 26.8%. Operating income was $15.4 million for the fourth quarter of 2020, compared with $10.5 million, an increase of 46.7%.

The fourth quarter 2020 net sales primarily reflected higher sales of $24.6 million of engineered products and $1.7 million for turbine engines, partially offset by lower sales of $1.1 million of energy systems. The higher sales primarily reflected increased sales from defense, nuclear and other manufacturing programs, as well as electronic manufacturing services products. The increase in operating income in the fourth quarter of 2020 reflected the impact of higher sales and a greater mix of higher margin fixed-price manufacturing programs.

Additional Financial Information

Cash Flow

Cash provided by operating activities was $236.4 million for the fourth quarter of 2020, compared with $167.9 million. The higher cash flow from operating activities for the fourth quarter of 2020 reflected the impact of higher net income and the timing of accounts receivable collections. At January 3, 2021, cash and cash equivalents and total debt were $673.1 million and $778.5 million, respectively, compared with cash and cash equivalents and total debt of $199.5 million and $850.6 million, respectively at December 29, 2019. At January 3, 2021, $125.0 million was outstanding under the $750.0 million credit facility with available borrowing capacity under the facility, which is reduced by borrowings and certain outstanding letters of credit, of $615.5 million. The company received $6.8 million from the exercise of stock options in the fourth quarter of 2020 compared with $5.4 million. Capital expenditures for the fourth quarter of 2020 were $19.4 million, compared with $23.9 million. Depreciation and amortization expense for the fourth quarter of 2020 was $28.7 million, compared with $29.3 million.

Teledyne and FLIR Systems, Inc. (“FLIR”) have entered into a definitive agreement under which Teledyne will acquire FLIR in a cash and stock transaction valued at approximately $8.0 billion. Under the terms of the agreement, FLIR stockholders will receive $28.00 per share in cash and 0.0718 shares of Teledyne common stock for each FLIR share, which implies a total purchase price of $56.00 per FLIR share based on Teledyne’s 5-day volume weighted average price as of December 31, 2020. The transaction is expected to close in the middle of 2021 subject to the receipt of required regulatory approvals, including expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, approvals of Teledyne and FLIR stockholders and other customary closing conditions.

As part of the transaction, Teledyne has arranged a $4.5 billion 364-day credit commitment to fund the transaction and refinance certain existing debt. Teledyne expects to fund the transaction with permanent financing prior to closing.