Teledyne Technologies Reports Third Quarter Results

THOUSAND OAKS, Calif.–(BUSINESS WIRE)–Teledyne Technologies Incorporated (NYSE:TDY)

• Record quarterly net sales of $1,539.5 million, an increase of 6.7% compared with last year
• Third quarter GAAP diluted earnings per share of $4.65
• Record quarterly non-GAAP diluted earnings per share of $5.57, an increase of 9.2% compared with last year
• Record quarterly cash from operations of $343.1 million and free cash flow of $313.9 million
• Raising full year 2025 GAAP diluted earnings per share outlook to $17.83 to $18.05, compared with the prior outlook of $17.59 to $17.97, and raising full year 2025 non-GAAP earnings per share outlook to $21.45 to $21.60, compared with the prior outlook of $21.20 to $21.50
• Quarter-end consolidated leverage ratio of 1.4x
• Announced pending carve-out acquisition of TransponderTech

Teledyne today reported third quarter 2025 net sales of $1,539.5 million compared with net sales of $1,443.5 million for the third quarter of 2024, an increase of 6.7%. The third quarter of 2025 net sales included $69.0 million in incremental sales from recent acquisitions. Net income attributable to Teledyne was $220.7 million ($4.65 diluted earnings per share) for the third quarter of 2025 compared with $262.0 million ($5.54 diluted earnings per share) for the third quarter of 2024, a decrease of 15.8%. The third quarter of 2025 included $55.1 million of pretax acquired intangible asset amortization expense, $0.7 million of pretax transaction and integration costs, $1.4 million of pretax inventory step-up expense and $0.2 million of income tax expense from FLIR acquisition-related tax matters. Excluding those items, non-GAAP net income attributable to Teledyne for the third quarter of 2025 was $264.5 million ($5.57 diluted earnings per share). The third quarter of 2024 included $49.8 million of pretax acquired intangible asset amortization expense, $3.7 million of pretax transaction and integration costs and $61.7 million of income tax benefits from FLIR acquisition-related tax matters. Excluding those items, non-GAAP net income attributable to Teledyne for the third quarter of 2024 was $241.3 million ($5.10 diluted earnings per share). Operating margin was 18.4% for the third quarter of 2025 compared with 18.8% for the third quarter of 2024. Excluding the items discussed above, non-GAAP operating margin for the third quarter of 2025 was 22.1% compared with 22.5% for the third quarter of 2024. The third quarters of 2025 and 2024 also included $7.3 million and $1.6 million of severance and facility consolidation costs not included within pretax transaction and integration costs, respectively.

“This morning, we were pleased to announce record quarterly sales, non-GAAP earnings per share and free cash flow,” said Robert Mehrabian, Executive Chairman. “Furthermore, total company new orders were also a quarterly record due in part to continued backlog growth at Teledyne FLIR. Given our strong third quarter performance, recovering commercial short-cycle businesses, and robust backlog growth, we are raising our full year earnings outlook. Our defense-related businesses, including our new acquisitions, are performing extremely well, and we continue to pursue a number of significant contract opportunities not yet formally awarded or reflected in our backlog. Nevertheless, given the current U.S. Government shutdown, we are a bit measured on expectations for new awards and shipments in the very near-term. Finally, our balance sheet is the strongest in years, providing the capacity to pursue acquisitions or stock repurchases, as we feel appropriate.”

Review of Operations

Comparisons are with the third quarter of 2024, unless noted otherwise.

Digital Imaging

The Digital Imaging segment’s third quarter 2025 net sales were $785.4 million compared with $768.4 million, an increase of 2.2%. Operating income was $123.4 million for the third quarter of 2025 compared with $123.9 million, a decrease of 0.4%. Acquired intangible amortization expense for the third quarter of 2025 was $46.8 million compared with $46.1 million. The third quarter of 2024 included $3.7 million of pretax transaction and integration costs. Excluding those items, non-GAAP operating income for the third quarter of 2025 was $170.2 million compared with $173.7 million, a decrease of 2.0%. The third quarters of 2025 and 2024 also included $6.0 million and $1.4 million of severance and facility consolidation costs not included within pretax transaction and integration costs, respectively.

Third quarter of 2025 net sales increased primarily due to higher sales of commercial infrared imaging components and subsystems, unmanned air systems and industrial automation imaging systems, partially offset by lower sales of unmanned ground systems. The decrease in operating income was primarily due to higher research and development expense, partially offset by increased net sales.

Instrumentation

The Instrumentation segment’s third quarter 2025 net sales were $363.6 million compared with $349.8 million, an increase of 3.9%. Operating income was $98.8 million for the third quarter of 2025 compared with $96.3 million, an increase of 2.6%. Acquired intangible amortization expense for the third quarter of 2025 was $3.3 million compared with $3.5 million. Excluding that item, non-GAAP operating income for the third quarter of 2025 was $102.1 million compared with $99.8 million, an increase of 2.3%.

The third quarter of 2025 net sales increase resulted from an $8.1 million increase in sales of environmental instrumentation primarily due to stronger sales of gas detection products, a $5.3 million increase in sales of marine instrumentation primarily due to stronger offshore energy and defense markets and a $0.4 million increase in sales of electronic test and measurement instrumentation. The increase in operating income primarily reflected the impact of higher net sales.

Aerospace and Defense Electronics

The Aerospace and Defense Electronics segment’s third quarter 2025 net sales were $275.5 million compared with $200.2 million, an increase of 37.6%. Operating income was $70.4 million for the third quarter of 2025 compared with $56.3 million, an increase of 25.0%. The third quarter of 2025 included $0.5 million of pretax transaction and integration costs, with no comparable amounts in the third quarter of 2024. Acquired intangible amortization expense for the third quarter of 2025 was $5.0 million compared with $0.2 million. Inventory step-up expense for the third quarter of 2025 was $1.4 million, with no comparable amounts in the third quarter of 2024. Excluding those items, non-GAAP operating income for the third quarter of 2025 was $77.3 million compared with $56.5 million, an increase of 36.8%.

Third quarter of 2025 net sales reflected higher sales of $75.6 million for defense electronics, partially offset by lower sales of $0.3 million for aerospace electronics. The third quarter of 2025 included $69.0 million of incremental defense electronics sales from recent acquisitions. The increase in operating income primarily reflected the impact of higher sales, partially offset by higher transaction and integration costs as well as higher acquired intangible amortization expense.

Engineered Systems

The Engineered Systems segment’s third quarter 2025 net sales were $115.0 million compared with $125.1 million, a decrease of 8.1%. Operating income was $12.2 million for the third quarter of 2025 compared with $12.9 million, a decrease of 5.4%.

Third quarter of 2025 net sales reflected lower sales of $9.2 million for engineered products and lower sales of $0.9 million for energy systems. The decrease in operating income was primarily driven by lower net sales in the third quarter of 2025.

Additional Financial Information

Cash Flow

Cash provided by operating activities was $343.1 million for the third quarter of 2025 compared with $249.8 million, with the increase driven primarily by the favorable timing of accounts receivable collections in the third quarter of 2025 compared with 2024. Depreciation and amortization expense for the third quarter of 2025 was $84.5 million compared with $76.9 million. Stock-based compensation expense for the third quarter of 2025 was $10.5 million compared with $8.7 million.

Capital expenditures for the third quarter of 2025 were $29.2 million compared with $21.1 million. Teledyne received $13.0 million from the exercise of stock options in the third quarter of 2025 compared with $5.0 million.

As of September 28, 2025, net debt was $2,004.8 million, which is calculated as total debt of $2,533.4 million, net of cash and cash equivalents of $528.6 million. As of December 29, 2024, net debt was $1,999.2 million, representing total debt of $2,649.0 million, net of cash and cash equivalents of $649.8 million. In the third quarter of 2025, the company repurchased and retired $84.9 million of principal of its fixed rate senior notes for $77.7 million in cash.

As of September 28, 2025, $1,168.7 million was available under the $1.20 billion credit facility after reductions of $31.3 million in outstanding letters of credit.

Income Taxes

The effective tax rate for the third quarter of 2025 was 19.3% compared with negative 2.8%. The third quarter of 2025 included net discrete income tax benefits of $4.9 million compared with $62.3 million, with the third quarter of 2024 benefits primarily related to the resolution of an uncertain tax position related to a pre-acquisition FLIR tax matter.

Other

Corporate expense was $22.0 million for the third quarter of 2025 compared with $18.7 million, with the increase primarily due to higher employee compensation costs, including severance costs. Non-service retirement benefit income was $2.7 million for the third quarter of 2025 compared with $2.8 million. Interest expense, net of interest income, was $12.6 million for the third quarter of 2025 compared with $15.7 million, with the decrease due to lower outstanding borrowings compared with the third quarter of 2024. Other income (expense), net, primarily consisted of a gain on debt extinguishment partially offset by foreign currency exchange losses in the third quarter of 2025. Other income (expense), net, primarily consisted of foreign currency exchange losses in the third quarter of 2024.

Outlook

Based on its current outlook, the company’s management believes that fourth quarter 2025 GAAP diluted earnings per share will be in the range of $4.76 to $4.98, and full year 2025 GAAP diluted earnings per share will be in the range of $17.83 to $18.05. The company’s management further believes that fourth quarter 2025 non-GAAP diluted earnings per share will be in the range of $5.73 to $5.88, and full year 2025 non-GAAP diluted earnings per share will be in the range of $21.45 to $21.60. The non-GAAP outlook excludes acquired intangible asset amortization, transaction and integration costs, inventory step-up expense, and FLIR acquisition-related tax matters.

Use of Non-GAAP Financial Measures

We report our financial results in accordance with generally accepted accounting principles in the United States (“GAAP”). We supplement the reporting of our financial results determined under GAAP with certain non-GAAP financial measures. The non-GAAP financial measures provide management, financial analysts and investors with additional useful information for evaluating the company’s performance. The non-GAAP financial measures should be considered in addition to and not as substitutes for financial measures prepared in accordance with GAAP. Further details on reasons we use non-GAAP financial measures, a reconciliation of those measures to the most directly comparable GAAP measures and other information related to those measures are included after our GAAP financial statements.

Forward-Looking Statements Cautionary Notice

This earnings release contains forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995, with respect to management’s beliefs about the financial condition, results of operations, acquisitions and product synergies, integration costs, tax matters, and businesses of Teledyne in the future. Forward-looking statements involve risks and uncertainties, are based on the current expectations of the management of Teledyne and are subject to uncertainty and changes in circumstances.

The forward-looking statements contained herein may include statements relating to sales, sales growth, stock-based compensation expense, tax rates, tariffs, governmental and economic policies, anticipated capital expenditures, stock repurchases, product developments, and other strategic options. Forward-looking statements generally are accompanied by words such as “projects”, “intends”, “expects”, “anticipates”, “targets”, “estimates”, “will” and words of similar import that convey the uncertainty of future events or outcomes. All statements made in this communication that are not historical in nature should be considered forward-looking. By its nature, forward-looking information is not a guarantee of future performance or results and involves risks and uncertainties because it relates to events and depends on circumstances that will occur in the future.

Actual results could differ materially from these forward-looking statements. Many factors could change anticipated results, including: the impact of policies of the U.S. Presidential Administration, especially with respect to new and higher tariffs, cutbacks in the funding of government agencies and programs, and the scaling back of environmental and green energy policies; escalating economic and diplomatic tension between China and the United States, including a “trade war” resulting in higher tariffs and restrictions on sales of goods and services; reciprocal tariffs from other countries, especially from members of the European Union; U.S. Government shutdowns, which in the past have resulted in delays in anticipated contract awards, delayed payments of invoices and delays in the issuance of export and other licenses; the inability to develop and market new competitive products; changes in relevant tax and other laws; foreign currency exchange risks; rising interest rates; risks associated with indebtedness, as well as our ability to reduce indebtedness and the timing thereof; the impact of semiconductor and other supply chain shortages; higher inflation, including wage competition and higher shipping costs; labor shortages and competition for skilled personnel; inherent uncertainties involved in the estimates and judgments used in the preparation of financial statements and the providing of estimates of financial measures, in accordance with GAAP and related standards; disruptions in the global economy; the ongoing conflict in Israel and neighboring regions, including related protests, attacks on defense contractors and suppliers, and the disruption to global shipping routes; the ongoing conflict between Russia and Ukraine, including the impact to energy prices and availability, especially in Europe; customer and supplier bankruptcies; changes in demand for products sold to the defense electronics, instrumentation, digital imaging, energy exploration and production, commercial aviation, semiconductor and communications markets; funding, continuation and award of government programs; cuts to defense spending resulting from existing and future deficit reduction measures or changes to U.S. and foreign government spending and budget priorities triggered by inflation, rising interest costs, and economic conditions; the imposition and expansion of, and responses to, trade sanctions and tariffs; the continuing review and resolution of FLIR’s trade compliance and tax matters; threats to the security of our confidential and proprietary information, including cybersecurity threats; risks related to artificial intelligence; natural and man-made disasters; and our ability to achieve emission reduction targets and decrease our carbon footprint. Lower oil and natural gas prices, as well as instability in the Middle East or other oil producing regions, and new regulations or restrictions relating to energy production could further negatively affect our businesses that supply the oil and gas industry. Weakness in the commercial aerospace industry negatively affects the markets of our commercial aviation businesses. Lower aircraft production rates at Boeing or Airbus could result in reduced sales of our commercial aerospace products. In addition, financial market fluctuations affect the value of the company’s pension assets. Changes in the policies of U.S. and foreign governments, including economic sanctions or in regard to support for Ukraine, could result, over time, in reductions or realignment in defense or other government spending and further changes in programs in which the company participates.

While the company’s growth strategy includes possible acquisitions, we cannot provide any assurance as to when, if or on what terms any acquisitions will be made. Acquisitions involve various inherent risks, such as, among others, our ability to integrate acquired businesses, retain key management and customers, and achieve identified financial and operating synergies. There are additional risks associated with acquiring, owning and operating businesses internationally, including those arising from U.S. and foreign government policy changes or actions and exchange rate fluctuations.

Additional factors that could cause results to differ materially from those described above can be found in Teledyne’s Annual Report on Form 10-K for the year ended December 29, 2024, as well as subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, all of which are on file with the U.S. Securities and Exchange Commission (“SEC”) and available in the “Investors” section of Teledyne’s website, teledyne.com, under the heading “Investor Information” and in other documents Teledyne files with the SEC.

All forward-looking statements speak only as of the date they are made and are based on information available at that time. Teledyne assumes no obligation to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements were made or to reflect the occurrence of unanticipated events except as required by federal securities laws. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements.

A live webcast of Teledyne’s third quarter earnings conference call will be held at 11:00 a.m. (Eastern) on Wednesday, October 22, 2025. To access the call, go to www.teledyne.com/investors/events-and-presentations approximately 10 minutes before the scheduled start time. A replay will also be available for one month starting at 12:00 p.m. (Eastern) on Wednesday, October 22, 2025.

Contacts

Jason VanWees

(805) 373-4542

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