THOUSAND OAKS, Calif. — (BUSINESS WIRE) — January 25, 2023 — Teledyne Technologies Incorporated (NYSE: TDY)

• Record quarterly sales of $1,418.2 million, an increase of 3.1% compared with last year

• Record quarterly GAAP diluted earnings per share of $4.74 and non-GAAP diluted earnings per share of $4.94

• Record quarterly GAAP operating margin of 19.3%

• Fourth quarter non-GAAP operating margin of 22.4%

• Record annual sales of $5,458.6 million, an increase of 18.3% compared with last year

• Record full year GAAP diluted earnings per share of $16.53 and non-GAAP diluted earnings per share of $18.19

• Completed the acquisition of ETM; quarter-end Consolidated Leverage Ratio declined to 2.4x

• Issuing full year 2023 GAAP diluted earnings outlook of $15.80 to $16.10 per share and full year 2023 non-GAAP earnings outlook of $19.00 to $19.20 per share

• Acquired ChartWorld International after year-end on January 3, 2023

Teledyne today reported fourth quarter 2022 net sales of $1,418.2 million, compared with net sales of $1,375.7 million for the fourth quarter of 2021, an increase of 3.1%. Net income attributable to Teledyne was $226.4 million ($4.74 diluted earnings per share) for the fourth quarter of 2022, compared with $161.8 million ($3.39 diluted earnings per share) for the fourth quarter of 2021, an increase of 39.9%. The fourth quarter of 2022 included $47.9 million of pretax acquired intangible asset amortization expense, $4.0 million of pretax income related to the favorable resolution of certain FLIR integration-related costs and $24.1 million of acquisition related discrete income tax benefits. Excluding these charges, non-GAAP net income attributable to Teledyne for the fourth quarter of 2022 was $236.1 million ($4.94 diluted earnings per share). In the fourth quarter of 2021, Teledyne incurred pretax expenses of $100.0 million, which included $51.4 million in acquired intangible asset amortization expense, $47.8 million in acquired inventory step-up expense and $0.8 million of transaction and integration-related costs. In the fourth quarter of 2021, Teledyne also incurred $21.4 million of acquisition related discrete income tax benefits. Excluding these charges, non-GAAP net income attributable to Teledyne for the fourth quarter of 2021 was $217.4 million ($4.56 diluted earnings per share). Operating margin was 19.3% for the fourth quarter of 2022, compared with 14.2% for the fourth quarter of 2021. Excluding acquisition-related transaction and purchase accounting expenses, non-GAAP operating margin for the fourth quarter of 2022 was 22.4%, compared with 21.5% for the fourth quarter of 2021.

“We were pleased to conclude 2022 with all-time record quarterly and full year sales and earnings per share,” said Robert Mehrabian, Chairman, President and Chief Executive Officer. “During 2022, Teledyne, as many other companies, found itself challenged by the external forces of inflation, a strong dollar and parts shortages. Nevertheless, we continued our long history of navigating these market environments, and we ultimately delivered earnings in excess of our own expectations. Fourth quarter sales growth was 3.1% despite approximately 2.6% of foreign currency translation headwind, and non-GAAP operating margin of 22.4% increased 95 basis points from last year. While we completed the acquisition of ETM, our quarter-end leverage ratio continued to decline. Our acquisition pipeline remains healthy, as evidenced by the recent addition of ChartWorld, whose maritime navigation software and hardware tools bridge a product and technology gap between our Teledyne Marine and Raymarine businesses.”

Full Year

Full year sales for 2022 were $5,458.6 million, compared with $4,614.3 million for 2021, an increase of 18.3%. Net income attributable to Teledyne was $788.6 million ($16.53 diluted earnings per share) for fiscal year 2022, compared with $445.3 million ($10.05 diluted earnings per share) for fiscal year 2021, an increase of 77.1%.

Full year 2022 net sales included $593.7 million in incremental net sales from current and prior year acquisitions. The full year of 2022 included $201.7 million of pretax acquired intangible asset amortization expense, $4.0 million of pretax income related to the favorable resolution of certain FLIR integration-related costs and $72.7 million of acquisition related discrete income tax benefits. Excluding these charges, non-GAAP net income attributable to Teledyne for the full year of 2022 was $867.8 million ($18.19 diluted earnings per share). The full year of 2021 included $149.3 million in pretax acquired intangible asset amortization expense, $106.4 million in pretax acquired inventory step-up expense, $103.0 million of pretax transaction and integration-related costs, $30.6 million in pretax bridge loan and debt extinguishment fees and $7.3 million of related discrete tax expense. Excluding these charges and related tax matters, non-GAAP net income for 2021 was $746.9 million ($16.86 diluted earnings per share). Operating margin was 17.8% for 2022, compared with 13.5% for 2021. Excluding acquisition-related transaction and purchase accounting expenses, non-GAAP operating margin for 2022 was 21.4%, compared with 21.3% for 2021. Full year 2022 reflected net discrete income tax benefits of $86.7 million compared with net discrete income tax benefits of $34.7 million for 2021.

Review of Operations

Comparisons are with the fourth quarter of 2021, unless noted otherwise. In the current year, gain (loss) on debt extinguishment was presented as a separate line item on the income statement. Prior year amounts were reclassified to conform to current year presentation.

Digital Imaging

The Digital Imaging segment’s fourth quarter 2022 net sales were $806.7 million, compared with $809.5 million, a decrease of 0.3%. Operating income was $152.0 million for the fourth quarter of 2022, compared with $94.1 million, an increase of 61.5%.

The fourth quarter of 2022 net sales decrease primarily resulted from lower sales of surveillance and unmanned ground systems for defense applications, partially offset by greater sales of industrial and scientific cameras, X-ray products, and commercial infrared imaging solutions. The increase in operating income was primarily due to lower inventory step-up and acquired intangible amortization expense in the fourth quarter of 2022. The fourth quarter of 2021 included $47.8 million in FLIR inventory step-up expense, with no comparable amount in the fourth quarter of 2022. Acquired intangible amortization expense for the fourth quarter of 2022 was $44.1 million compared with $46.3 million.

Instrumentation

The Instrumentation segment’s fourth quarter 2022 net sales were $326.2 million, compared with $302.2 million, an increase of 7.9%. Operating income was $79.0 million for the fourth quarter of 2022, compared with $66.7 million, an increase of 18.4%.

The fourth quarter of 2022 net sales increase resulted from higher sales across all external product lines. Sales of marine instrumentation increased $11.0 million, sales of environmental instrumentation increased $10.0 million, and sales of test and measurement instrumentation increased $3.0 million, respectively. The increase in operating income primarily reflected the impact of higher sales and favorable product mix.

Aerospace and Defense Electronics

The Aerospace and Defense Electronics segment’s fourth quarter 2022 net sales were $177.9 million, compared with $163.3 million, an increase of 8.9%. Operating income was $52.8 million for the fourth quarter of 2022, compared with $40.6 million, an increase of 30.0%.

The fourth quarter of 2022 net sales reflected higher sales of $11.9 million for defense electronics and $2.7 million for aerospace electronics. Operating income in the fourth quarter of 2022 reflected the impact of higher sales and improved margins across most defense electronics product categories.