Teledyne Technologies Incorporated

Ladies and gentlemen, thank you for standing by. Welcome to the Teledyne third quarter earnings call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. Instructions will be given at that time. If you need assistance during the call, press star zero. As a reminder, this conference is being recorded. I'd now like to turn the conference over to Jason VanWees. Please go ahead.

Good morning, and thank you, everyone. This is Jason VanWees, Executive Vice President, and I'd like to welcome everyone to Teledyne's third quarter 2019 earnings release conference call. We released our earnings earlier this morning before the market opened. Joining me today are Teledyne's Executive Chairman, Robert Mehrabian, President and CEO, Al Pichelli, Senior Vice President and CFO, Sue Main, and SVP General Counsel, Chief Compliance Officer, and Secretary, Melanie Cibik. After remarks by Robert L. and Sue, we will ask for your questions. However, before we get started, our attorneys have reminded me to tell you that all forward-looking statements made this morning are subject to various risks and assumptions and caveats in our earnings release and periodic SEC filings, and of course, actual results may differ materially. In order to avoid potential selective disclosures, this call is simultaneously being webcast and a replay, both via webcast and dial-in, will be available for approximately one month. Here is Robert.

Thank you, Jason, and good morning, everyone, and thank you for joining our earnings call. Today, once again, we reported the strongest quarter in Teledyne's history. Sales, earnings per share, and free cash flow were all-time records. Operating margin increased 150 basis points compared to last year, and operating margin was also a record for any third quarter period. In the quarter, sales increased 10.6% and exceeded 800 million for the first time. Including approximately 1% of currency headwinds, organic growth was 5%. Given the strong organic growth as well as acquisitions, Sales in each business segment increased by double-digit rates for the first time in over 12 years. Record earnings per share of $2.84 increased 16.9% compared to last year. While we've increased our emphasis on margin improvement, We're continuing our proven strategy of disciplined capital deployment for compound growth in earnings and cash flow. We were pleased to complete the acquisition of 3M's gas and flame detection business on August 1st. In addition, with the acquisition of MicroLine on August 30th, we immediately increased our microelectromechanical systems or MEMS manufacturing capacity while also adding unique microfluidic technology for biotech applications. Teledyne continues to benefit from our balanced portfolio of common technologies serving different complementary markets. Our 2019 outlook continues to reflect strong growth In our life sciences and defense imaging businesses, more than offsetting declines in some industrial machine vision markets. Our defense and space electronics businesses will more than offset some lower sales of avionics to certain commercial OEM air transport platforms. In addition, the early stage recovery of marine instrumentation continues. We achieved strong growth in orders and sales and ended the quarter with the largest backlog in over four years. Finally, despite closing two acquisitions in the quarter, our balance sheet remains exceptionally strong with a quarter end leverage ratio of 1.6. Before turning the call to Al, I want to note that we slightly Realign the financial reporting of our segments. This was solely done to match our current management reporting structure and historical results have been restated to conform to the new structure. Furthermore, I want to emphasize that all of our financial results this morning are reported on a gap basis with no adjustments for amortization, stock compensation, acquisition charges, purchase accounting, restructuring, or any other charges. I will not comment on the performance of our four business segments.