Advertisement
Canada markets closed

  • S&P/TSX

    21,947.41
    +124.19 (+0.57%)
     

  • S&P 500

    5,127.79
    +63.59 (+1.26%)
     

  • DOW

    38,675.68
    +450.02 (+1.18%)
     

  • CAD/USD

    0.7308
    -0.0006 (-0.08%)
     

  • CRUDE OIL

    77.99
    -0.96 (-1.22%)
     

  • Bitcoin CAD

    87,108.80
    -295.58 (-0.34%)
     

  • CMC Crypto 200

    1,327.37
    +50.39 (+3.95%)
     

  • GOLD FUTURES

    2,310.10
    +0.50 (+0.02%)
     

  • RUSSELL 2000

    2,035.72
    +19.61 (+0.97%)
     

  • 10-Yr Bond

    4.5000
    -0.0710 (-1.55%)
     

  • NASDAQ

    16,156.33
    +315.37 (+1.99%)
     

  • VOLATILITY

    13.49
    -1.19 (-8.11%)
     

  • FTSE

    8,213.49
    +41.34 (+0.51%)
     

  • NIKKEI 225

    38,236.07
    -37.98 (-0.10%)
     

  • CAD/EUR

    0.6787
    -0.0030 (-0.44%)
     

Teledyne Technologies Inc (TDY) Q1 2024 Earnings Call Transcript Highlights: Record Results ...

GuruFocus Research
·3 min read

  • Non-GAAP Operating Margin: Record high for Q1 2024.

  • Adjusted Earnings Per Share: Record level reported.

  • Free Cash Flow: Reached a record amount.

  • Overall Sales Forecast: Expected to be flat for the full year 2024 compared to 2023.

  • Operating Margin Forecast: Anticipated to remain flat in 2024 versus 2023.

  • Digital Imaging Segment Sales: Declined year-over-year; notable decrease in machine vision sensors and cameras.

  • Instrumentation Segment Sales: Slightly down by 0.9% from the previous year.

  • Marine Instruments Sales: Increased by 15.3%.

  • Environmental Instruments Sales: Decreased by 5.8%.

  • Electronic Test and Measurement Sales: Decreased by 18.2% year-over-year.

  • Aerospace and Defense Electronics Sales: Increased by 7.2%.

  • Engineered Systems Sales: Decreased by 10.5%.

  • Q1 Book-to-Bill Ratio: Healthy at 1.6x for the Digital Imaging segment.

  • GAAP Operating Margin: Increased by 183 basis points to 26% in the Instrumentation segment.

  • Non-GAAP Operating Margin: Improved by 175 basis points to 27.1% in the Instrumentation segment.

  • Stock Repurchases: Added to capital deployment plan for the quarter.

  • Q1 2024 Free Cash Flow: $275.1 million, up from $178.6 million in Q1 2023.

  • Q2 2024 EPS Forecast: GAAP EPS between $3.57 and $3.70; non-GAAP EPS between $4.40 and $4.50.

  • Full Year 2024 EPS Forecast: GAAP EPS between $16.02 and $16.27; non-GAAP EPS between $19.25 and $19.45.

  • Estimated Tax Rate for 2024: Expected to be 22.5%, excluding discrete items.

Release Date: April 24, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Q & A Highlights

Q: Given the weakness in some of the higher-margin areas of the short-cycle business, how are you thinking about gross margins over the next couple of quarters? A: Robert Mehrabian, Executive Chairman, indicated that they are looking at relatively flat gross margins around 43%.

ADVERTISEMENT

Q: With the shift in capital allocation, what does this imply for the M&A pipeline? Are you still seeing more opportunities for smaller deals as opposed to larger M&A? A: Robert Mehrabian explained that Teledyne has significant capacity for acquisitions, with up to $1.5 billion to $2 billion available without touching their line of credit. They plan to repurchase shares and continue evaluating acquisition opportunities, expecting both smaller and potentially larger acquisitions.

Q: Is Teledyne different today than what has made it so successful over the past 20 years, especially considering the uncharacteristic guidance cut? A: Robert Mehrabian addressed that Teledyne has only had to adjust guidance in about 4% of earnings calls over 25 years. He emphasized that the company's ability to absorb economic shocks has improved significantly, attributing this resilience to a broader platform and a stronger balance sheet.

Q: Can you provide insights into the timing mismatch in declines seen in the machine vision sector compared to peers? A: Robert Mehrabian noted that Teledyne's timing in experiencing declines in the machine vision sector differed from peers due to different fiscal quarters and the nature of their contracts. He highlighted that while peers are recovering, Teledyne is now seeing the impact, which they are addressing by reducing costs.

Q: How much is the guidance really derisked, and why should there be confidence given the low visibility in shorter-cycle areas? A: Robert Mehrabian explained that the guidance is moderately conservative, balancing risk and reasonable market judgment. He mentioned that the backlog in defense and space should support revenue in the second half of the year, compensating for short-cycle uncertainties.

Q: Could you discuss any improvements in the supply chain and expectations going forward? A: Robert Mehrabian noted significant improvements in the supply chain from 2022 to 2023, with reduced reliance on brokers indicating better availability and pricing of electronic components. He mentioned ongoing delays with some sophisticated parts but overall positive trends.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.