Teledyne Technologies Incorporated

Welcome to Teledyne's first quarter earnings release conference call. Here's our first speaker, Mr. Jason Van Weese.

Good morning, and thanks everyone for joining us. This is Jason Van Weese, Vice Chairman, and we're about to begin our first quarter 2025 earnings release conference call. We released our earnings earlier this morning before the market opened. Joining me today are Teledyne's Executive Chairman, Robert Morabian, CEO Edwin Rocks, President and COO George Bob, and EVP CFO Steve Blackwood, and finally Melanie Sivek, EVP, General Counsel, Chief Compliance Officer, and Secretary. After remarks by Robert, Edwin, George, and Steve, we will ask for your questions. But of course, before we get started, attorneys have reminded me to tell you that all forward-looking statements made this morning are subject to various assumptions, risks, and caveats, as noted in the earnings release and our SEC filings. approximately one month. Here is Robert.

Thank you, Jason, and good morning everyone, and thank you for joining our earnings call. In the first quarter, we achieved many records, including first quarter total sales, which increased 7.4%, accelerating for two quarters in a row and growing at the greatest rate in years. Sales also increased organically in every segment. Furthermore, non-GAAP earnings per share and GAAP earnings per share and operating non-GAAP operating margin were also records for any first quarter. We're pleased to close the key optic carve-out acquisition in the first quarter. But I should note also that a few months before closing, Qoptic was awarded major new contracts with both the UK and German Ministry of Defense, resulting in multi-year acquired backlog. In any event, even excluding this acquired backlog, orders for Teledyne as a whole exceeded sales for the sixth consecutive quarter. We continue to execute our strategy, which has delivered long-term results regardless of economic and political uncertainty. That is, maintained a balanced and resilient mix of commercial and government businesses across a broad range of geographies and markets, and we continue to improve margins in existing businesses and acquire and integrate complementary companies. Before further commenting on the quarter, I wanted to offer some perspective given the current unpredictable operating environment. While we're going to focus on what we can control, it's worth noting the following. Teledyne has never believed that offshoring U.S. manufacturing and technology was a wise action. As a result, we have little low-cost country manufacturing, we are a net exporter, and most of our external sales are produced and sold within regions. To be specific, approximately 80% of our sales are from U.S.-based locations, to U.S.-based customers or our international locations to international customers. Of the remaining 20% of total sales, approximately 80% or roughly 16% of the total are U.S. export sales to international location, but only 2% of total sales are U.S. export sales to China. Finally, just 4% of external sales are from Teledyne international locations to US-based customers where new tariffs may apply for our customers. Now, regarding our own supply chain, we import relatively little from China and Mexico with the 2024 annual value of each less than 25 million dollars our largest import from canada is internal sales of unmanned air systems for the u.s military a large portion of which we believe would be subject to usdod duty-free exemption while we're not immune to the current 10 plus percent of tariff rates or certainly the pre-pause liberation they proposed tariff rate, we are certainly planning actions to protect margins as the landscape evolves. That includes taking further exemptions under the U.S.-Mexico-Canada Agreement and from the United States Department of Defense, as well as taking advantage of recent exemptions for import of certain electronic components, and then finally, of course, pricing actions where we find necessary. Turning to our full-year sales and earnings outlook, we must assume that the market uncertainty will have some impact. While this is nearly impossible to quantify, we've assumed a negative sales impact of perhaps about 1% of annual sales, offset by the key optic acquisition, resulting in 2025 estimated sales of approximately $6 billion. Also, while we exceeded our first quarter midpoint guidance of $4.85, And we expect a contribution from Keyoptic, which is now included in our outlook. We think it's wise to maintain our full-year earnings outlook. Edwin and George will now briefly comment on the performance of our four business segments.