Teledyne Technologies Incorporated

Q2 2021 Earnings Conference Call


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spk_1: this
spk_2: ladies and gentlemen thank you for standing by welcome to the teledyne second quarter earnings call twenty twenty one at this time all participants are in a listen only mode later will conduct a question answer session instructions will be given at that time if you should require assistance during the conference please press star than zero as a reminder to east conference is being recorded and in no way to turn the conference over to your host jason been least go ahead
spk_3: they do in the morning everyone and then we'd get a vice president and the like to welcome everyone the teledyne second quarter earnings release conference call and was released earnings are there this morning before the market open dirty me today are televised executive chairman robert arabian president and ceo l the a senior vice presidency of those who remain and senior vice president and will consulted compliance officer and secretary melanie said it after remarks by robert allen who will ask your questions again there before we get started turning have reminded me to tell you at all forward looking statements made this morning are subject to various functions with can copy of as noted in the earnings release and or periodic fcc filings and of course actual results may differ materially in order to avoid potential strike the disclosures this call is simultaneously being webcast and are you played by a web test and i am and of the available for approximately one month
spk_4: it was albert thank you jane son and good morning and thank you for joining our earnings call for over two decades now we've continuously improve our portfolio businesses are operations and our financial performance and along the way significant the compound compounded earnings cash flow and shareholder returns it is worth noting that just over ten years ago a major milestone occurred when with the that part of the asian piston engine business and out on opponent fees associated liabilities wow initiated earlier erm immediately following that could best be we we're exonerated our pace of change by making increasingly significant and successful acquisitions within our digital imaging and instrumentation businesses a recent acquisition of their exonerate televise evolution and to a more attractive five martin industrial technology company while at the same time maintaining our balanced portfolio primarily focused on commercial market but with and resilient unpredictable backbone of government businesses for example in the second quarter of two thousand and twenty one seventy five percent of taught them company sounds work there are from us commercial an international customers and twenty five percent of sales from the us government he the past several weeks we've made rapid progress integrating flair by implementing teledyne processes such as acceleration of financial forecasting and reporting increasing visibility of sales and cause said cost organization while continuing to enhance players compliance standards furthermore with eliminated significant cornbread overhead overhead consultants and other third party service providers and as a result we now expect to achieve our annualized cost savings target of eighty million the
spk_5: dollars
spk_4: before the end of two thousand and twenty two as opposed to two thousand and twenty four as described in our final merger proxy turning to the second quarter results the second quarter was truly a record for teledyne with sam's operating margin an earnings that's excluding acquisition related costs all of these increase significantly from prior period we achieved double digit organic growth for the come total company with say have swung digital imaging environmental an electronic person benjamin things for instrumentation increasing from seventeen percent for nearly twenty five percent you know the you the operating margin of our legs legacy businesses collectively was an all time record and with clear are non gap operating margin of twenty two point eight percent was an all time record in the second quarter i should note that very strong non gap margin an earnings performance and queue to resulted partially on a disproportionate amount of sales from flir relative to costs that it even the years current like caitlyn charities shipments we officially benefited from eight and a half weeks equivalent of sales volume a contribution margin relative totally six weeks out fix cost in the second half players quarterly say is relative to cause with normalized resulting in somewhat lower margins in all cases excluding transaction related expenses in addition the average share causing the second quarter only partially to blame for the stock issued in connection with the player transaction which will impact he appears in the second half
spk_6: on a four year basis
spk_4: and after a strong first path we know think it's reasonable outlook for legacy ten of i'm businesses organic growth in two thousand and twenty want to be a truck approximately six point five percent led by forecast that growth of nearly twelve percent in in digital imaging excluding theory with normal nominee sales for a few three i do for we expect flair to contribute sales are just under one point three billion in two thousand and twenty one collectively therefore when i expect that expect reported sales only you are
spk_7: approximately
spk_4: four billion five hundred eighty million dollars are you on knock which excludes acquisition related transactions transaction that person as much as i can't be expensive can be summarized as promised in a pre and we provided a gap earnings outlook for legacy teledyne businesses up about twelve dollars and ten cents
spk_7: on a comparable bases
spk_8: our current outlook
spk_4: is approximately twelve dollars and forty cents which is thirty cents above the earlier outlook
spk_9: given the fifty basis points increase in organic growth from six to six and a half percent today vs a broom and forty basis points additional margin improvement that's resulted in the overall thirty cent increase in odd
spk_4: guidance intangible assets amortization from prior to clear transaction divided by the pretty clear share can't would add that on eighty cents to our earnings resulting in a free clear outlook of thirteen dollars and twenty cents not incorporating flair including kids are usually song period harsher be a performance and cute to and excluding transaction costs all in all year two thousand and twenty one attrition of over two dollars per share and us our current long gap outlook is fifteen dollars or twenty five cents cupid didn't dollars and fifty cents
spk_10: i would not have turned a corner where to out for a comment on the performance of our business segment thank you roddick in our digital imaging segment second quarter sales and reached one hundred and forty three point nine percent largely due to the flir acquisition but organic growth was seventeen percent segment operating margin was fourteen point six percent and twenty seven point five percent when adjusting for transaction costs and purchase a county although this was unusually high as robert mentioned earlier in or instrumentation segment overall second quarter sales increased ten point six percent versus last year sales of environmental rent increase nineteen point six percent from last year sales of most product categories increased and total quarterly sales were just slightly lower than the peak level before the coded pandemic sales of electronic test and measurements systems are exceptionally strong and increased twenty four point six percent year over year to record levels sales alarm marine instrumentation decreased four point five percent and a quarter high ever orders for the strongest and the five quarters was a second quarter but to build a one point one three overall instrumentation segment operating profit increased thirty three point two percent with segment operating margin increasing over three hundred and sixty basis points with or without intangible assets advertise asia moving to the aerospace and defense electronic second segment second quarter sales increased six point five percent driven by an eight point one percent growth in defense space and industrial sales combined with flat year over year sales of commercial aerospace for audits gap segment operating profit increased sixty two point three percent with margins six hundred and forty basis points greater than last year and the engineered system segment second quarter revenue decreased one point five percent primarily you to degrade greater sales from missile defense and marine manufacturing programs more than offset by laura sales of electronic manufacturing services products and turban engines as we exited the cruise missile engine business at the end of the first quarter
spk_11: despite slightly lower sales segment operating profit and margin increased slightly when compared with last year
spk_12: i will now trying to call the so will offer some additional commentary regarding the third quarter and our for all your twenty twenty one earnings like think you're around the morning that know i'm i'm afraid to start them additional financing for the quarter not covered by rather than out and then i will discuss a third quarter and full year two thousand one one outlet in the third employer cash flow from operating activities like two hundred eleven point three million dollars including all up with assimilated clock escalating acquisition already passed class lot of pack has from operations with two hundred and seventy eight point two million dollars compared with cash flow of one hundred and fifty five point eight million dollars for the same period of two thousand twenty free cash flow that it has been operating activities less capital expenditures excluding acquisition related caught with two hundred and fifty seven point two million dollars in the second quarter of two thousand twenty one compared with one hundred and thirty nine point two million dollars in two thousand and twenty capital expenditures would twenty point eight million dollars in a second quarter compared to sixteen point six million dollars for the same period of two thousand and twenty depreciation and amortization expense with fifty nine point seven million dollars for the second quarter two thousand twenty one compared to twenty nine million dollars in two thousand and twelve any in addition non cash and mentally step up expense for the second quarter of two thousand twenty one was twenty three point four million dollars we ended the quite it with approximately four point zero five billion dollars of net debt that is approximately four point seven four billion dollars of debt let pass of six hundred and ninety five point one million dollars the hired the balance of july fourth two thousand twenty one included the dead nk define the cast place and of the flair acquisition stop some compensation expense was three point six million dollars for the second quarter two thousand twenty one compared to five point seven dollars for the same period of two thousand twenty resulting from the flare acquisition restricted stock unit expense for fully employed with point four million dollars in the second quarter of two thousand twenty one turning to our outlet management currently believe that gap earnings per share in the third quarter of two thousand twenty one will be in the range of two dollars two dollars and fifteen cents per share with non gaap earnings in the range of three dollars and fifty five cents the three dollars and sixty five
spk_4: and for the full year two thousand twenty one eyed gap earnings per share outlook is eight dollars and place that has to eight dollars and forty five cents and on a non get basis fifteen dollars and twenty five cents to fifteen dollars and fifty cents
spk_2: the two thousand and twenty one full year estimated tax rate excluding discreet item is expected to be twenty three point nine percent in addition we currently that less discreet paths items in two thousand twenty one compared with two thousand and twenty mail past the call that to other
spk_13: thank you so with know like to take your questions operator if you're ready to proceed with the questions than answers before her
spk_2: yes thank you ladies and gentlemen if you wish to ask the question please press one zero
spk_14: if you are using a speaker phone please pick up your handset before pressing the number and tn if you would like to ask a question please press one zero at this time our first question comes from my mother was wolf research please go ahead
spk_4: the morning thanks to time
spk_15: can you just add some color around operating performance at legacy digital imaging you touch with this six v spurs spake just tolerance and some of that that performance
spk_4: right thanks my god on the to see digital imaging business stand alone
spk_14: the margins where twenty four point four percent
spk_16: as as last year if you add back the intangibles the margins where twenty one point five percent served in the legacy digital are emerging the margins improve about two hundred and eighty basis points
spk_17: okay that's great and what what sort of drove there were there some sort of cost initiatives or or was it just know
spk_18: max
spk_4: another color about our cause from a
spk_19: labour crossword maintain a flat year over year
spk_14: ad sales increased seventeen percent and the other one was the mix my we had been a mix of machine vision which as highest a margins got it thank you i and then on
spk_20: can you on can you discuss your capital deployment priorities posts clear if we should expect any sort of shift in your behavior on whether that's
spk_21: because of the higher that balance or
spk_4: sort of color the there yes our primary objective this year my it in capital deployment is to reduce on them as fast as we can we have love
spk_22: we expect to generate more cash the most of the year
spk_23: and we anticipate that
spk_4: a year end this year are there to the cat would be better than likely projected or about three point three in terms of ratio of nothing to he be doing
spk_24: we also expect that the by the end of two thousand and twenty two we can reduce that needs to be ready to two point seven which is were at the high end of what we feel is constant one for itself or immediate task is to pay does that generate cash paid on there
spk_4: it
spk_25: having said all of that we do have the capacity to make small it both on acquisition
spk_26: we've done historically
spk_2: and we would do that the such opportunities arise
spk_13: great thank you
spk_4: thank you like
spk_10: our next question comes from joe
spk_4: she er i know with cohen please go ahead
spk_27: he does have more than one job
spk_4: oh i know it's early to talk to me for you but can you just give us some high level thoughts on how clear contribution starts to look on the normalized basis for a full year of once we know if we start thinking about eighty million and run rate savings of the next year well let's let me start with probably we have this here are jury by may as i mentioned before we think that that on a non gap basis we'll have an upside of about with two dollars to two dollars and twenty cents in terms of earnings if we can maintain that momentum out for next year where we would enjoy preferably a for your benefit of the clouds reduction i would say we may be able to increase that do as high as two daughters of the percent from this year's two dollars and two to two dollars and twenty seven only reason i say that is a full year pollution will experience from shared come our share a common thing to treat you tube was forty three point seven percent forty four percent forty four million shares next year for year we have a forty eight million sheriff count class as we were having to treat you for up this yourself there's gotta be so my dad and trying to make the other side
spk_28: oh the enjoyed that we haven't really had an opportunity to put out a part in turn on cost reduction
spk_4: in inside player or next year yet this this cause seductions we spoke about who are generally related to corporate the expenses employer expenses costs and third party expenses and consultants out there i hope that they'll be either up can it is that we can enjoy or it that twenty two when it you know it's only eight weeks in and seven hard to predict right now
spk_22: so he brought that you know the eighty million in two years basically what are your thoughts on upside is that target i know it's still pretty early but thought daughter might longer term there and maybe on revenue synergy potential from the deal
spk_4: yeah whatever job
spk_29: i would read that to a hundred million
spk_4: from eighty to one hundred on the upside the average hey from their revenue synergies we haven't looked at that very carefully but there are areas that we intend to do enjoy them synergies specifically for example clear has as you know a pretty strong ray marine business and irene know thermal products business we are very very broad portfolio of marine not an underwater as well as shown on another product so there should be some synergies there there's also find to the synergies in art and man a proper flair is very song a new a these had gone base or unmanned vehicles and are course you know we have it very from and this portfolio for underwater vehicles so we think i by the revenue synergies want without listener
spk_18: beginning he waves were kind of looking at it
spk_4: right now and finally i say clear does have an extremely good channel
spk_28: for have some hope our job some of their products which we might be able to enjoy in some apart our own
spk_4: an infrared products through those him and then just let me add and you mention flir you expect them point three billion in sales the hear what what does that take the if you had a if you owned it for the full year and what do you think organic or flir is in twenty twenty one and what you think like a more the normalize growth mages once we get over the comps from like the thermal sensing thing called it
spk_27: yeah i think up as you know last year they fool year revenue rose one point nine to treat
spk_4: we expected on a full year basis to remain flat at about one point nine one five one point nine nine point nine to some flat having said that as you mentioned job the big head when that ah
spk_30: we have year over year in teledyne mayor is that last year they enjoyed about a hundred million dollars up elevated skin temperature product sales this year
spk_4: that's gone away essentially disappear so we're making that up with other products some of it in the solutions business some up with the re marine and some of it in the defense business especially in the unmanned integrated systems businesses so that kind of sets the tone year over year of no god but being able to offset the hundred million dollars
spk_31: of head when and now
spk_27: you i it i mean in not is he having said that
spk_4: i'm got it looked forward to just enjoying the same kind of growth that we enjoyed this year
spk_28: exploiting
spk_2: ah yes t uk take that out of the one point nine to you'd better of the portfolio go about five percent organically so my expectation would be that you everything else being equal than not know will come off the truck that would be able to enjoy that makes you
spk_32: for it pays off your back and you
spk_33: sir
spk_34: i next question can stand jam
spk_33: could eat with need him and company please go ahead
spk_4: i a tiny ten as congratulations on this surfers quarter with near love it i wonder what if he could a little bit of about how we might think about the gross margins of the combined company going forward as you really boots grew the integration process well that's a that's a very good question so i'm escape i can answer it properly
spk_27: ah are gross margin as it and as teledyne as a standalone company or historical margin have been and on thirty nine thirty thirty eight to thirty nine percent last year
spk_4: he was out of i'd thirty eight point three the here first quarter was thirty eight point nine and a second quarter
spk_27: on it and not gap bases you know excluding them
spk_30: that one time cause i think was gonna happen at the gross margins if you take ours in two thousand and twenty and thirty eight point three percent i think it be safe to say that we can move that up to forty three percent maybe forty three point three percent
spk_4: up and that would be a nice for proof for job percent improvement in gross margin with hello nine flair or that's about the best i can do at this time for this year
spk_27: are we are right now looking get blood
spk_33: the will happen the in the future again let me go back and emphasize one thing because of the hockey stick nature of the revenue into to at clear the i see a name for to to was significantly lower than it normalized should be it was more like twenty
spk_4: he percent and it really should the between and the average about twenty five to twenty seven percent so that so i'm fact that those in at this time
spk_27: yeah that that's that's helpful and what what can you say about that this hockey stick yeah performance from flir and queue to work contributed to that end and a if i just don't go question and i'll jump back into the queue not not you are out to just give us any flavor for how your booking to
spk_4: look for the combined company thank you sure gym parse that a hockey stick notice i think that's been a historical that practice at the teledyne player ah they've always a ship mark in the last two weeks out the month and in the first two weeks out the month and the last two weeks out the part that i should say and the last two weeks out the year now
spk_27: ah we were not exactly totally blameless ourselves me i can't say our revenues are totally linear are we were very very hard over the years to linear eyes are revenues within the month of within the and month over month every
spk_35: the has to report on their revenues and bookings weekly so this is it is an issue that doesn't have an overnight dancer but we been a work very hard to introduce some up our own track it says working with that the flare up ah segment
spk_4: exact subject with exact with by the way or really outstanding and get that lady arise that shipment of that they gear of doing that instead he come the to the end of the month or end up the quarter something happens or something doesn't get ship now you really suffered he suffered
spk_27: revenue yourself very returning so we're going to work on that let me go back to a book to build
spk_4: the question you ask and turns out teledyne stand alone first a car carlisle legacy teledyne at this point we expect that our dog book to build an now will be about one specially and these two months i think you'd be about one point of seven that includes very time board there's in marina damage to in the second or third quarter in digital imaging excluding flu ah a it was a buffet one point one six in cute to but flares is below one
spk_33: so combined with think with be slightly over wanting to to milan point two or three one point your for
spk_13: aerospace defense and teller nine
spk_36: it's good or there's both games
spk_37: that of look to be earlier about one point two engineers systems which is very lovely is about one point one seven so older dog i'd say including teledyne player were gonna be over one in kyoto maybe one point two six one point and seven got it thanks very much
spk_4: chosen i next question comes to greg canard with jeffries please go ahead good morning what a drag i just started on organic growth he brought up the forecast for the year ed better specs for the app which he had a little bit of toleration from what you saw on due to the uk from color around digital imaging that can he may be talk about yeah different segments next vacations or organic growth
spk_38: and and maybe have that change and and maybe where there's and opportunities in the back after the year
spk_6: sure grandfathers if you go back to january of two thousand twenty one flip projects heard the not meant organic growth of about five point five five point six percent
spk_4: in april things which and improving with projected organic go talk about six percent and in this earnings weighed more that up to six point six percent that's overdrive what i would say legacy teledyne that excluding the mirror acquisition you read that gone into its components israel month we anticipate with some risks
spk_6: in there about six six point two percent
spk_28: digital imaging eleven point eight percent almost twelve percent for the or that charge pass this movie to business
spk_37: ah with the in aerospace and defense specially not a witch think a little more recovery and or aerospace businesses would think i'll be about for at four point four four point five percent
spk_4: with he life is great this decrease in engineers system something i'll go there have been more point five percent primarily because be about said we don't have that have been engines for the most of the you you're gonna of that out the end up with six point five six point six percent now if they're gonna make continues to improve at a pace that it's own specialty not instrumentation on digital imaging business as we could improve on that someone but tried not to the best out there are of ability to project where project named van avenue for the year of about how will we not clear about three thousand i know a with player about four five eight two that may help form and then if you give a little collar on on digital imaging margins but he instrumentation was also a very impressive the in the corridor and mean how do you think about margins there with that makes him in and and obviously marine was down a little better at see the margins kind of playing out well let me start with instrumentation ogre on yes marine was a little done by the was done a very near the margins were pretty healthy ah overall instrumentation margining to to on a non gap faces i'm the reason i'm doing this non gap is we do have some math intangibles that come in all of these groups and to compare year over the year if i do it now and gap a crude canavan like as the gap mom is intangible amortization last year instrumentation over our margin was twenty point four percent this year cute to his twenty four percent a we expect to finish the year that twenty two point two percent which would be almost at two hundred basis points informant a hundred and ninety two bases is fighting for woman over two thousand and twenty and i would just trivia that to the fact that a mix of businesses are very good where are the or of environmental businesses are doing very well and i got pnm businesses which have really high margins because of our see a cops and of course or protocol so's margins are superior south yeah almost two hundred basis points improvement the robert it instruments margin including a marine heard is that we're very happy about that a legacy david digital imaging again or margins part due to were really good at twenty four point four percent versus last year's june to our twenty one point five percent we anticipate to end the year that is excluding paradigm smear
spk_39: where'd margins out twenty two point one percent versus last year's of twenty one point five percent twenty one point four percent so an improvement or how of hundred and seventy five basis points
spk_4: ah clear of course we have tremendous margin in june two or ought just thirty percent of that slightly over i think i'll come dance closer to twenty two percent of the year goes on they saw the hockey stick nature that i've described before and so overall digital imaging should and about this year about twenty two point seven percent with canada clear or aerospace and defense businesses are doing really well
spk_37: but you have you got your comparisons are we think we will end the year i became point eight percent molecules which is more hundred ninety two basis points improvement over last year or last year we took some one time charges
spk_28: we took a lotta cost out of that there are aerospace side of the business but nevertheless that almost five hundred basis points in chrome of the margin and i expect them to engineer systems to be relatively flat lawler that up
spk_40: we have come from a segment perspective on a non gap bases wish you'd enjoy margins are twenty one point two percent based on everything i know right now
spk_4: versus last year's eighteen point seven and if you're trying a corporate their expenses again i i should theater and on a non yeah places with end up about twenty percent margin vs sixteen point eight last year which is over two hundred basis points improvement that hell yeah that that pentagon just one last one for me kind of big picture mean teledyne always been consistent with lead with a by it the upside you know whether that the in a margin expansion each year he'll organic growth through the cycle i mean have you think about it you know the flu acquisition changing the enterprise and yeah i get a lot of questions about twenty twenty kill you know you've already pulled forward that the synergies from when you first expected yeah added added the kind of change that the opportunity that whether it yeah the annual margin expansion or organic growth is the kind of go forward well let me start by saying behaviors don't change we're gonna we're going to be the same we're not gonna change we're gonna be conservative in our job projections we always going to try and build better than that
spk_2: we've done by taking risks
spk_41: ah by being to have her residence in our protection having said that
spk_37: ah having met martha theory executive team
spk_41: and they've made presentations to the board games are there were the next three days all of them are going to be working with us
spk_28: what are they are really good that see outstanding executive that report to or executive vice president had been drugs and we anticipate that they will do the same as the rest of teledyne focus on cause focus on april in margins focus on join their top line and where appropriate will make a small acquisitions and kid will pay down as that i don't expect our behavior to change would keep improving
spk_4: thank you or next question comes from andrew as skill ya with a bargain clan
spk_42: good morning and drove back to mind that that bamberg ah they they they can you go on a our you out i was guide gravy and sometimes
spk_43: effect yeah right arm oh yeah robert things that are your candidate than the call and and as wearing a ya que ya adding onto the kind of the last comment
spk_44: can you talk a little bit about you you wait what's what are you seen with clear that has surprised you are mother it's good or bad don't like that yeah them that the these managers are private be out by the in terms of the quality of
spk_45: how they're operating but he has thing at a thing you'd like to discuss that job
spk_46: you didn't expect knew it would actually have since having made acquisition or vice versa where you're surprised that the out and growth potential the be wary he didn't expect that to be the case when you literally bought there anything you could add their be great
spk_4: well if it when when we look at the player portfolio there are really for segments
spk_6: made out of
spk_4: about former eight businesses three of the segment which would be the solution segment the components totally oh yeah i'm segment and the odd man integrated system segment which comprise about one point five billion of the one point nine a weird pleasantly impressed with those two segments are they have good leadership and now the three segment with the roger where are the leading real rely as our played on leading or yen and component and roger and record leave vowed leading the solution businesses this have really healthy businesses and from my personal perspective
spk_27: while i wasn't surprised because we've visited them many many times before the acquisition i was up
spk_4: very pleased not only with what we've seen but also their presentations yesterday to the board were just super afford such segment is the one that had some issues and as the surveillance segment which about four hundred million dollars
spk_27: i have been there in that segment is that they've had multiple leadership changes almost annually
spk_4: but the last for five years or they've been kind of milking that cause
spk_47: ah for the last few years in terms of cash and they have paid attention to your product development as much as they should
spk_4: in that case what we've done is with done something gotta were brought in an appellate nine executive that work for as be more back to run that business where the hell are nine executive or name is g m g i s capital as the in the l a i we brought her to run the surveillance business used to be one of our executives and not i'm in order of digital imaging business she went to the government to the or the to work in the
spk_6: research and the
spk_41: of technology groups
spk_28: ah she
spk_4: cheer up ended up the here as acting deputy secretary lord oh you're did research and technology projects the gypsy huge program have had laboratory it's all of the businesses she just joined us two weeks ago i was able to was fortunate to being heard that she has been here two and a half weeks
spk_40: how she would be the surveillance fact segment which is the one that we need to work on and i know she will love thinks that we die we bedminster fan with get some new product in there then put that on a heart healthy
spk_4: the footing having said that once we thought that i think the for such segments are going to suffer with the leadership and that come with the edwin live and good and them with that combination with their legacy telephone companies with all the synergies we can enjoy as we have a greater aspirations and books for the combined company okay and out that's how poke
spk_28: in and yeah what what i'm catholic the decision to quit we're all on a digital imaging why why don't you break that up with the aerospace and defense exposure and an anti that daughter is that possibility in the future
spk_37: yeah i think the arrangements out the segments are a possibility but you know ah
spk_48: you gotta you gotta walk before you start thinking about running felt like not keeping it where it is and then
spk_4: drawing lines of communication and collaboration is probably doing for example one of the things we've done very successfully over the last two years that teledyne is our procurement initiatives we have lab significant savings that not come out apart procurement by about one point two billion dollars worth of products clear five than others on seven eight hundred million dollars or products we gonna introduce our procurement city there up eventually were made to some realignment trump but not right now okay and you're likely yeah we'd rather than that it's a breath of if you can hit the net debt either die target the it get that you put out there
spk_49: you get a and cholera on what be cash flow could be this year or how to think about that i realize it's kind of a messy
spk_50: couple quarters
spk_2: yeah they have had i think out of the way i look at it is
spk_14: what were we going to end up the year everything else being equal so measures were we were in kyoto we had a really good cute too we think with the around seven fifty two eight hundred million dollars exploding charges
spk_4: i've i want to get there because we want to increase are available cash to pay down debt from what is not about six hundred seventy six hundred eighty million to over a billion dollars so we can't do that
spk_51: hop on a go forward bases if we didn't ever known have are those charges and we go forward i think a billion is a nice number i feel comfortable now i can now get that number maybe twenty two may be up in twenty three would be more appropriate because we have some are expensive and twenty two
spk_4: of at the top of like rabbit thank you our next question cause some make money with of research please go ahead hey thanks for coming back and structures cheers and your commercial aerospace business and i know that certified between out but have you seen any demand indicators the had that would sort of point toward a change in behavior on monitoring the cabin firemen house calvin and generally just those types of products you sell those to the manufacturers or the airlines think you're right
spk_52: as with most of our products in the aftermarket coming on consoles he goes directly to airline and we'd have at this time like we have at least two major airlines
spk_28: testing the cabin know environmental sensors ah we're grateful oxford that as you know we qualify the down the seven three seven before in march and then yesterday or the a tree twenty or which is the mark of the chair years we
spk_4: oh right now introducing those of course nobody wanted to give it to them for free so they can test it for we know that do that
spk_27: ah so we have high expectations for that the just like in some ways have mini version of when they introduced the wireless grandly many years ago
spk_4: ah all around are on the airspace businesses exactly kinda will relatively flat quarters not year over year quarter over quarter but things are picking up and we are seeing something like car
spk_6: it fact second quarter or there's about a one point cheap books to build and that's very healthy far as code that a high margin business also so are we out the mistake with the boy putting their job maxine operation that some of that either that airlines specially becoming
spk_53: out a profit about me up in his the cabinet business will come back slowly but surely
spk_4: a scam
spk_54: sherman
spk_18: questions and joe sure down all with calling please go ahead
spk_24: a gets as you can be that guy i was going after that recast love the rubber just answered his question goes so maybe i'll just finish with them
spk_4: it will not have been going on but new space launches and what's going on a commercial landscaping you may be just talk about what gets you excited in the space as a bite you whether it's through in nasa were your pieces as you say or commercial like where you where you think your best position where you most excited about well i think up first and foremost
spk_55: we really like our job
spk_4: work working infrared and visible in the space don't make anything to the with satellite we practically supply all of the
spk_56: detectors forge
spk_4: space based stuff observation both looking out and looking to the earth including a lot of the environmental studies whether it's carbon or whatever we own a big chunk out that market and now we're moving to classify spent so we have some great emerging products in the classified space
spk_28: the program
spk_57: now
spk_58: ah
spk_4: in that space travel mad said when and how are you on a call that ah yeah we make some products are now it turns out that equipment
spk_28: but ah we're not that involved in there right now i think our focus has to be remain with sensors on information technologies for them
spk_50: immediate future where we'd have a strategic advantage because we can make infrared sensors know nobody else can
spk_4: and with each of these visible sensors and now having other channels
spk_59: with flir already forget about we think that that would be the place i see an upside for us
spk_4: i don't i love i'm a little cautious on not commercial space
spk_60: the development you know we do have some piece of communication linda
spk_61: one where program
spk_2: as you know what everybody wants to not beyond that thousands of satellites and web based upon degrees guess you can imagine
spk_62: yeah hit definitely i've just been clocked one for clarification when you said one billion in cash flow for your twenty two twenty three something like that with get a free cash flow comment or that operating kessler
spk_52: thank you
spk_2: that's free since and i thought
spk_62: i moved is a year the minute you set free
spk_2: at that that i i got it

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