Teledyne Technologies Reports Second Quarter Results

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

• All time record quarterly orders, sales and operating profit
• Second quarter net sales of $1,662.5 million, an increase of 9.8% compared with last year
• Second quarter GAAP diluted earnings per share of $5.37
• Second quarter non-GAAP diluted earnings per share of $6.28, an increase of 20.8% compared with last year
• Second quarter cash from operations of $315.2 million and free cash flow of $284.7 million
• Raising full year 2026 GAAP diluted earnings per share outlook to $20.73 to $20.99 compared with the prior outlook of $20.08 to $20.44, and raising full year 2026 non-GAAP earnings per share outlook to $24.45 to $24.65, compared with the prior outlook of $23.85 to $24.15
• Quarter-end consolidated leverage ratio of 1.1x

Teledyne today reported second quarter 2026 net sales of $1,662.5 million compared with net sales of $1,513.7 million for the second quarter of 2025, an increase of 9.8%. The second quarter of 2026 net sales included $12.2 million in incremental sales from recent acquisitions. Net income attributable to Teledyne was $251.7 million ($5.37 diluted earnings per share) for the second quarter of 2026 compared with $209.9 million ($4.43 diluted earnings per share) for the second quarter of 2025, an increase of 19.9%. The second quarter of 2026 included $56.0 million of pretax acquired intangible asset amortization expense, $0.2 million of pretax transaction and integration costs, and $0.5 million of income tax benefits from FLIR acquisition-related tax matters. Excluding those items, non-GAAP net income attributable to Teledyne for the second quarter of 2026 was $294.3 million ($6.28 diluted earnings per share). The second quarter of 2025 included $54.6 million of pretax acquired intangible asset amortization expense, $1.9 million of pretax transaction and integration costs, $1.2 million of pretax inventory step-up expense and $7.7 million of income tax benefits from FLIR acquisition-related tax matters. Excluding those items, non-GAAP net income attributable to Teledyne for the second quarter of 2025 was $246.3 million ($5.20 diluted earnings per share). Operating margin was 20.0% for the second quarter of 2026 compared with 18.4% for the second quarter of 2025. Excluding the items discussed above, non-GAAP operating margin for the second quarter of 2026 was 23.4% compared with 22.2% for the second quarter of 2025.

“This morning, we were pleased to announce the strongest quarterly orders, sales, and operating profit in the company’s history,” said Robert Mehrabian, Executive Chairman. “Sales and non-GAAP earnings increased 9.8% and 20.8%, respectively, and we ended the quarter with approximately $5.0 billion of funded backlog. Organic growth was greatest in our Digital Imaging segment, where infrared detectors and systems for space and airborne and marine unmanned systems, as well as counter unmanned applications, each increased considerably. Furthermore, we achieved growth in our other segments and each product line within the Instrumentation segment. At the beginning of the quarter, we repaid $450 million of gross debt, and given the strength of our balance sheet, we continue to review a number of acquisitions.”

Review of Operations

Comparisons are with the second quarter of 2025, unless noted otherwise.

Digital Imaging

The Digital Imaging segment’s second quarter 2026 net sales were $868.7 million compared with $771.0 million, an increase of 12.7%. Operating income was $170.2 million for the second quarter of 2026 compared with $119.6 million, an increase of 42.3%. Acquired intangible asset amortization expense for the second quarter of 2026 was $47.4 million compared with $46.3 million. Excluding this item, non-GAAP operating income for the second quarter of 2026 was $217.6 million compared with $165.9 million, an increase of 31.2%.

Second quarter of 2026 net sales increased primarily due to higher sales of infrared imaging detectors, components and subsystems for both defense and commercial applications as well as higher surveillance systems, industrial and scientific imaging systems, and X-ray products. The second quarter of 2026 included $6.1 million of incremental Digital Imaging sales from a recent acquisition. The increase in operating income primarily reflected higher net sales, favorable product mix and tariff refunds partially offset by higher research and development expense and higher inventory reserves.

Instrumentation

The Instrumentation segment’s second quarter 2026 net sales were $387.8 million compared with $367.6 million, an increase of 5.5%. Operating income was $101.4 million for the second quarter of 2026 compared with $101.6 million, a decrease of 0.2%. Acquired intangible asset amortization expense for the second quarter of 2026 was $3.4 million compared with $3.3 million. Excluding this item, non-GAAP operating income for the second quarter of 2026 was $104.8 million compared with $104.9 million, a decrease of 0.1%.

The second quarter of 2026 net sales increase resulted from a $9.7 million increase in sales of marine instrumentation primarily due to stronger offshore energy and defense markets, a $7.2 million increase in sales of environmental instrumentation primarily due to $6.1 million of incremental sales from a recent acquisition, and a $3.3 million increase in sales of electronic test and measurement instrumentation. The decrease in operating income primarily reflected the impact of unfavorable product mix in the segment.

Aerospace and Defense Electronics

The Aerospace and Defense Electronics segment’s second quarter 2026 net sales were $286.4 million compared with $264.8 million, an increase of 8.2%. Operating income was $74.5 million for the second quarter of 2026 compared with $66.6 million, an increase of 11.9%. Acquired intangible asset amortization expense for the second quarter of 2026 was $5.2 million compared with $5.0 million. The second quarter of 2025 included $0.6 million of pretax transaction and integration costs with no comparable amount in the second quarter of 2026. Inventory step-up expense for the second quarter of 2025 was $1.2 million with no comparable amount in the second quarter of 2026. Excluding acquired intangible asset amortization expense, pretax transaction and integration costs, and inventory step-up expense, non-GAAP operating income for the second quarter of 2026 was $79.7 million compared with $73.4 million, an increase of 8.6%.

Second quarter of 2026 net sales reflected higher sales of $20.8 million for defense electronics and higher sales of $0.8 million for aerospace electronics. The increase in operating income primarily reflected the impact of higher sales.

Engineered Systems

The Engineered Systems segment’s second quarter 2026 net sales were $119.6 million compared with $110.3 million, an increase of 8.4%. Operating income was $15.1 million for the second quarter of 2026 compared with $12.1 million, an increase of 24.8%.

Second quarter of 2026 net sales reflected higher sales of $8.9 million for engineered products and higher sales of $0.4 million for energy systems. The increase in operating income was primarily driven by changes in program mix.

Additional Financial Information

Cash Flow

Cash provided by operating activities was $315.2 million for the second quarter of 2026 compared with $226.6 million, with the increase driven by favorable operating results in the second quarter of 2026 compared with 2025 as well as lower income tax payments. Depreciation and amortization expense for the second quarter of 2026 was $85.7 million compared with $86.5 million. Stock-based compensation expense for the second quarter of 2026 was $13.9 million compared with $11.3 million.

Capital expenditures for the second quarter of 2026 were $30.5 million compared with $30.3 million. Teledyne received $3.3 million from the exercise of stock options in the second quarter of 2026 compared with $4.7 million.

As of June 28, 2026, net debt was $1,686.9 million, which is calculated as total debt of $2,027.0 million, net of cash and cash equivalents of $340.1 million. As of December 28, 2025, net debt was $2,123.0 million, representing total debt of $2,475.4 million, net of cash and cash equivalents of $352.4 million. During the second quarter of 2026, the Company made a $450.0 million debt maturity payment.

As of June 28, 2026, $1,160.7 million was available under the $1.20 billion credit facility after reductions of $39.3 million in outstanding letters of credit.

Income Taxes

The effective tax rate for the second quarter of 2026 was 21.7% compared with 19.3%. The second quarter of 2026 included net discrete income tax benefits of $1.2 million compared with $8.4 million.

Other

Corporate expense was $28.0 million for the second quarter of 2026 compared with $21.7 million, with the increase related to higher compensation costs, including incentive compensation as well as higher professional services. Non-service retirement benefit income was $2.6 million for the second quarter of 2026 compared with $2.7 million. Interest expense, net of interest income, was $13.6 million for the second quarter of 2026 compared with $17.6 million, with the decrease due to lower outstanding borrowings compared with the second quarter of 2025. Other income (expense), net, primarily consisted of foreign currency exchange losses in the second quarter of 2026 and 2025.

Outlook

Based on its current outlook, the company’s management believes that third quarter 2026 GAAP diluted earnings per share will be in the range of $5.10 to $5.25, and full year 2026 GAAP diluted earnings per share will be in the range of $20.73 to $20.99. The company’s management further believes that third quarter 2026 non-GAAP diluted earnings per share will be in the range of $6.05 to $6.15, and full year 2026 non-GAAP diluted earnings per share will be in the range of $24.45 to $24.65. The non-GAAP outlook excludes certain transaction and integration costs and acquired intangible asset amortization.

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, capital expenditures, stock repurchases, 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. All statements made in this earnings release that are not historical in nature should be considered forward-looking. Actual results could differ materially from these forward-looking statements.

Many factors could change anticipated results, including: the impact of the 2026 conflict between the United States and Iran, including among other things, higher energy costs and energy supply constraints, disruptions in shipping, supply shortages of critical materials, including aluminum, metals, chemicals and industrial helium supplies, disruptions to air travel, the risk of retaliation against U.S. targets by Iran or its proxies, and slower global growth, 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; global conflicts including the conflict in the Middle East as well as the ongoing conflict between Russia and Ukraine; 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, and economic conditions; the imposition and expansion of, and responses to, trade sanctions and tariffs; 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. Volatile oil and natural gas prices, as well as instability in the Middle East, Latin America or other oil producing regions, could 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 the Ukraine or Middle East conflicts, 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 28, 2025, 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.

Forward-looking statements are generally accompanied by words such as “estimate”, “project”, “predict”, “believes”, or “expect”, that convey the uncertainty of future events or outcomes. Teledyne assumes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information or otherwise.

A live webcast of Teledyne’s second quarter earnings conference call will be held at 11:00 a.m. (Eastern) on Wednesday, July 22, 2026. 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, July 22, 2026.

Jason VanWees
(805) 373-4542