Q4 2023 Teledyne Technologies Inc Earnings Call

January 24, 2024

[music].

and continue to hold.

Okay.

Thank you.

[music].

Okay.

Speaker Change: Ladies and gentlemen, good morning. Thank you for standing by. Welcome to the Teledyne fourth quarter earnings call. At this time, all lines are in a listen-only mode. Later, there will be an opportunity for your questions, and instructions will be given at that time. If you require any assistance today, please press star followed by the zero, and an AT&T operator will assist you. As a reminder, today's conference is being recorded.

Ladies and gentlemen, good morning, Thank you for standing by welcome to the Teledyne fourth quarter earnings call. At this time all lines are in a listen only mode. Later, there will be an opportunity for your questions and instructions will be given at that time. If you should require any assistance today. Please press star followed by zero.

Speaker Change: And in AT&T, operator will assist you as a reminder, today's conference is being recorded.

Speaker Change: It's my pleasure to turn the conference over to our host, Mr. Jason VanWees. Please go ahead.

Speaker Change: This time, it's my pleasure to turn the conference over to our host Mr. Jason <unk>. Please go ahead.

Speaker Change: Thanks Tom and thanks everyone. This is Jason VanWees, Vice Chairman. I'd like to welcome everyone to Teleden's fourth quarter and full year 2013 earnings release conference call. We released our earnings earlier this

Speaker Change: Thanks, Tom and thanks, everyone. This is Jason <unk>, Vice Chairman I would like to welcome everyone to Teledyne's fourth quarter and full year 2013 earnings release Conference call. We released our earnings earlier this morning.

Jason VanWees: Joining me today are Teledyne's executive chairman, Robert Mehrabian, and our new but familiar management team, the CEO, Edwin Rocks, President and COO, George Bob, Senior Vice President and CFO, Steve Blackwood, and also Melanie Civic, EVP and General Counsel, Chief Compliance Officer and Secretary. After remarks by Robert, Edwin, George, and Steve, we will ask for your questions. Of course, though, 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 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 $1.

Joining me today are teledyne's executive Chairman, Robert Mehrabian, and a new but familiar management team CEO Edwin rugs, President and C. O O George Bob Senior Vice President and CFO, Steve Blackwood and also knowing the civic EVP and General Counsel, Chief compliance Officer and Secretary.

Robert: By Robert Edwin Georgia, Steve We will ask for your questions of course, though 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 periodic SEC filings and of course actual results may differ materially in order to avoid potential selim.

Robert: The disclosures this call is simultaneously being webcast and a replay both via webcast and Ireland will be available for approximately one month.

Jason VanWees: Here's up.

Robert: Here is Robert.

Robert Mehrabian: Thank you, Jason. Good morning and thank you for joining our earnings call.

Thank you, Jason and good morning, and thank you for joining our earnings call.

Robert Mehrabian: In the fourth quarter, we achieved all-time record sales

Robert: In the fourth quarter, we achieved all time record sales and GAAP and non-GAAP earnings per share.

Robert Mehrabian: and GAAP and non-GAAP earnings per share.

Robert Mehrabian: Sales increased primarily

Robert: Sales increased primarily due to the performance of our marine medical and aerospace businesses, which were more than able to compensate for the previously announced headwind in the industrial automation and laboratory instrumentation market.

Robert Mehrabian: Due to the performance of our marine, medical, and aerospace businesses, which were more than able to compensate for the previously announced headwind in the industrial automation and laboratory instrumentation,

Robert: Furthermore.

Robert Mehrabian: Furthermore,

Robert: Overall record orders exceeded sales in every business segment, but were particularly strong in our marine and defense businesses.

Robert Mehrabian: Overall record orders exceeded sales

Robert Mehrabian: Leverage declined further to 1.9 and our balance sheet remains healthy.

Robert: Leverage declined further to one nine and our balance sheet remains healthy.

Robert Mehrabian: Finally,

Robert: Finally.

We continue to acquire complementary businesses as shown by the acquisition of xenon networks in the fourth quarter.

Robert Mehrabian: We continue to acquire complementary businesses as shown by the acquisition of Zeno Networks in the fourth quarter.

Robert: Compared with last year fourth quarter and full year non-GAAP operating margin increased 27.

Robert Mehrabian: Compared with last year, fourth quarter and full year non-GAAP operating margins increased 27%,

Robert Mehrabian: and 57 basis points respectively.

Robert: And 57 basis points, respectively.

Our broad based strength in orders was encouraging.

Robert Mehrabian: Our broad-based strength in orders was encouraged.

Robert Mehrabian: especially in the uncertain times.

Robert: Especially in.

Robert: In the uncertain.

Robert Mehrabian: global and macro environment today.

Robert: Global and macro environment today.

Robert Mehrabian: Nevertheless,

Robert: Nevertheless, it's worth noting that most of the increase in orders was in our backlog driven longer cycle businesses are converging the orders to sales will take a little time.

Robert Mehrabian: It's worth noting that most of the increase in orders was in our backlog-driven, longer-cycle businesses.

Robert Mehrabian: So converting the orders to sales will take a little time.

Robert Mehrabian: In terms of 2024 outcomes,

Robert: In terms of 2024 at Nook.

Robert Mehrabian: We therefore think the quarterly sales and earnings ramp will be a bit greater than in recent years.

Robert: We therefore think the quarterly sales and earnings ramp would be a bit greater than in recent years.

Robert Mehrabian: So while we see annual 2024 sales growth of about 4%,

Robert: So while we see annual 2020 for sales growth.

Robert: <unk>, 4%.

Robert Mehrabian: We believe that typically seasonally low first quarter will be slightly under $1.4 billion or roughly flat with last quarter.

Robert: We believe that typically seasonally low first quarter will be slightly under 154 billion or roughly flat with last year.

Speaker Change: I will now turn the call over to Edwin and George who will further comment on the performance of our four

Speaker Change: I will now turn the call over to Edwin and George who will further comment on the performance of our floor.

Speaker Change: BusinessSync.

Business segments.

Speaker Change: Thank you I hope this is Edwin and I will report on the digital imaging segment, which is 56% of stabilized portfolio I'd like to have a lending as a whole. The segment. There is a mix of longer cycle businesses, such as defense space and healthcare combined with shorter cycle markets, including industrial automation semiconductors.

Speaker Change: Thank you, Robert. This is Edwin, and I will report on the digital imaging segment, which is 56% of TeleLens' portfolio.

Edwin Rocks: And like Teleline as a whole, this segment is a mix of longer cycle businesses such as defense, space, and healthcare, combined with shorter cycle markets including industrial automation, semiconductor inspection, and infrared components and cameras for application ranging from factory condition monitoring and maritime navigation.

unknown: <unk> and infrared components and cameras for application ranging from victory condition monitoring and maritime navigation.

unknown: Fourth quarter of 2023 sales were slightly lower compared to last year double double digit sales growth in each of X ray products three of surveillance systems and space based infrared imaging, the Texas offset that significantly year over year decline in sales of industrial imaging systems and micro electrical mechanical.

Edwin Rocks: Fourth quarter 2023 sales were slightly lower compared with last year. Double-digit sales growth in each of X-ray products, FLIR surveillance systems, and space-based infrared imaging detectors offset a significant year-over-year decline in sales of industrial imaging systems and microelectrical mechanical systems, or MEMS.

unknown: Our Mems.

Edwin Rocks: Fourth quarter sales of unmanned systems were at the greatest level in 2023, but declined year over year due to a tough comparison.

unknown: Fourth quarter sales in men's systems, where at the greatest level in 2023, but declined year over year due to a tough comparison.

unknown: For the second quarter in a row, the FLIR business collectively were positive contributors to overall segment margin. In addition, <unk> quarterly sales increased year over year and were at the highest level in the last two years.

Edwin Rocks: For the second quarter in a row, the FLIR businesses collectively were positive contributors to overall segment margin. In addition, FLIR quarterly sales increased year over year and were at the highest level in the last two years.

Edwin Rocks: George will now report on the other three segments, which will represent the remaining 44% of talent.

Speaker Change: George will now report on the other three segments, which will represent the remaining 44% of standalone. Thanks.

George J. Godfrey: Thanks Edmund.

George: Thanks Edwin.

George J. Godfrey: The instrumentation segment consists of our marine, test and measurement, and environmental businesses, which contribute a little over 23% of the total.

George: The instrumentation segment consists of our marine test and measurement and environmental businesses, which contributed a little over 23% of sales.

George J. Godfrey: For the total segment, overall fourth quarter sales increased 2.8% versus last year.

George: For the total segment overall fourth quarter sales increased two 8% versus last year.

Emily Beynon: and continue to hold. Thank you. transcript Emily Beynon, Ladies and gentlemen, good morning. Thank you for standing by. Welcome to the Teledyne fourth quarter earnings call. At this time, all lines are in a listen-only mode.

George J. Godfrey: Sales of marine instruments increased 14.7% in the quarter, primarily due to strong offshore energy sales, but also continued growth in global defense and ocean science.

George: Sales of Marine instruments increased 14, 7% in the quarter, primarily due to strong offshore energy sales, but also continued growth in global defense and Ocean Science markets.

George J. Godfrey: Sales of electronic test and measurement systems, which include oscilloscopes, digitizers, and protocol analyzers, were flat year over year.

George: Sales of electronic test and measurement systems, which include a silver scopes Digitizes and protocol analyzers were flat year over year.

We continue to see some softness in sales of analyzers for electronic storage and data centers applications, but this was largely offset by continued strong sales of oscilloscope and a small amount of incremental sales from the zena acquisition.

George J. Godfrey: We continue to see some softness in sales of analyzers for electronic storage and data centers.

George J. Godfrey: But this was largely offset by continued strong sales of oscilloscopes and a small amount of incremental sales from the Xenax.

George: Sales of environmental instruments decreased seven 3% with greater sales of air quality and gas and flame safety analyzers more than offset by lower sales of drug discovery and laboratory instruments.

George J. Godfrey: Sales of environmental instruments decreased 7.3%.

George J. Godfrey: with greater sales of air quality and gas and flame safety analyzers, more than offset by lower sales of drug discovery and laboratory.

Operator: Later, there will be an opportunity for your questions, and instructions will be given at that time. If you require any assistance today, please press star followed by zero, and an AT&T operator will assist you. As a reminder, today's conference is being recorded. It's my pleasure to turn the conference over to our host, Mr. Jason VanWees. Please go ahead.

George: Overall instrumentation segment operating profit increased over 14% in the fourth quarter with GAAP operating margin, increasing 284 basis points to 27, 1% and 278 basis points on a non-GAAP basis or 28, 1%. Both all time records for the segments.

George J. Godfrey: Overall instrumentation segment operating profit increased over 14% in the

George J. Godfrey: with gap operating margin increasing 284 basis points to 27.1%.

George J. Godfrey: and 278 basis points on a non-GAAP basis to 28.1%.

Thanks, Tom, and thanks everyone. This is Jason VanWees, Vice Chairman. I'd like to welcome everyone to Teleden's fourth quarter and full year 2013 earnings release conference call. We released our earnings earlier this morning. Joining me today are Teledyne's executive chairman, Robert Mehrabian, and our new but familiar management team, the CEO, Edwin Rocks, President and COO, George Bob, Senior Vice President and CFO, Steve Blackwood, and also Melanie Civic, EVP and General Counsel, Chief Compliance Officer After remarks by Robert, Edwin, George, and Steve, we will ask you questions. Of course, though, before we get started, my lawyers 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 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 $1. Okay. Thank you, Jason.

George J. Godfrey: both all-time records for the second.

George: In the aerospace and defense electronics segment, which represents 13% of telephone sales.

George J. Godfrey: In the aerospace and defense electronics segment, which represents 13% of Teledyne sales,

George J. Godfrey: Fourth quarter sales increased 3.4%, primarily driven by growth of commercial aerospace.

George: Fourth quarter sales increased three 4%, primarily driven by growth of commercial aerospace products.

George J. Godfrey: Gap and non-gap segment operating profit decreased approximately 5% year-over-year, primarily due to a tough comparison with last year's all-time record segment.

George: GAAP and non-GAAP segment operating profit decreased approximately 5% year over year, primarily due to a tough comparison with last year's all time record segment margins.

George J. Godfrey: For the Engineered Systems segment, which contributes 8% to overall sales, fourth quarter revenue decreased 3.8%, but operating profit increased with margin up $325.

For the engineered systems segment, which contributes 8% to overall sales fourth quarter revenue decreased three 8%, but operating profit increased with margin up 325 basis points.

George J. Godfrey: I will now pass the call back to Robert.

George: I will now pass the call back to Robert.

Robert Mehrabian: Thank you, George.

Robert: Thank you George.

Robert Mehrabian: In conclusion,

Robert: In conclusion.

Robert Mehrabian: We were pleased with our record performance in 2023.

Robert: We were pleased with our record performance in 2023.

Robert Mehrabian: in the near term.

Robert: In the near term.

Robert Mehrabian: We will continue to focus on growth in those businesses with favorable markets

Robert: We'll continue to focus on growth in those businesses with favorable markets.

Robert Mehrabian: while cutting costs and protecting margins in businesses which are more challenged.

While cutting costs and protecting margins and businesses, which are more challenged.

Robert Mehrabian: Good morning, and thank you for joining our earnings call. In the fourth quarter, we achieved all-time record sales and GAAP and non-GAAP earnings per share. Sales increased primarily due to the performance of our marine, medical, and aerospace businesses, which were more than able to compensate for the previously announced headwind in the industrial automation and laboratory instrumentation business. Furthermore, Overall record orders exceeded sales, Leverage declined further to 1.9, and our balance sheet remains healthy. Finally, We continue to acquire complementary businesses, as shown by the acquisition of Zeno Networks in the fourth quarter.

Robert Mehrabian: and at the same time we'll be acquiring and integrating complementary

Robert: And at the same time, we'll be acquiring and integrating complementary businesses.

Robert Mehrabian: When certain markets like laboratory instrumentation, industrial automation, or electronic tests and measurements recover,

Robert: When certain markets like laboratory instrumentation, industrial automation or electronic test and measurement to recover.

Robert Mehrabian: We will keep our cost structure

We'll keep our cost structure.

Robert: In check and benefit.

Robert Mehrabian: in check and benefit

Robert Mehrabian: had some.

Robert: And simply.

Robert: But if.

Robert Mehrabian: But if...

Robert Mehrabian: There are global or macroeconomic shocks in 2024. We will do what we've done in the past.

Robert: There are global or macroeconomic shocks in 2024, we will do what we've done in the past.

Robert Mehrabian: Execute Well

Executing well Jenny.

Robert Mehrabian: Generate record cash flow and complete some of our best and potentially larger acquisitions.

Robert: <unk> generated record cash flow and complete some of our base in <unk>.

Robert: Potentially larger acquisitions I will now turn the call over to Steve.

Robert Mehrabian: I will now turn the call over to Steve.

Steve Blackwood: Thank you Robert and good morning. I will first discuss some additional financials for the quarter not covered by Robert and then I will discuss our first quarter and full year 2024 outlook.

Steve: Thank you Robert and good morning, I'll first discuss some additional financials for the quarter not covered by Robert and then I will discuss our first quarter and full year 2024 outlook.

Steve Blackwood: In the fourth quarter, cash flow from operating activities was $164.4 million, compared with $237.7 million in 2022.

Steve: In the fourth quarter cash flow from operating activities was $164 $4 million.

Robert Mehrabian: Compared with last year, fourth quarter and full year non-GAAP operating margins increased 27% and 57 basis points, respectively. Our broad-based strength in orders is encouraged, especially in these uncertain times and global and macro environment today. Nevertheless, it's worth noting that most of the increase in orders was in our backlog-driven, longer-cycle businesses, so converting the orders to sales will take a little time.

Steve: Compared with $237 $7 million in 2022.

Steve Blackwood: Free cash flow, that is cash from operating activities less capital expenditures was $124.2 million in the fourth quarter of 2023.

Steve: Free cash flow that is cash from operating activities less capital expenditures was $124 2 million in the fourth quarter of 2023, compared with $203 6 million in 2022.

Steve Blackwood: compared with $203.6 million in 2022.

Steve Blackwood: Cash flow declined in the fourth quarter since we made $139 million of additional tax payments, which we were allowed to defer from the second and third quarters of 2023 due to IRS disaster relief.

Steve: Cash flow declined in the fourth quarter since we made $139 million of additional tax payments, which we were allowed to differ from the second and third quarters of 2023 due to the IRS disaster relief.

Steve: Without these catch up tax payments quarterly cash flow with at an all time record.

Steve Blackwood: Without these catch-up tax payments, quarterly cash flow would have been an all-time record.

Steve Blackwood: Capital expenditures were $40.2 million in the fourth quarter of 2023, compared with $34.1 million in 2022.

Steve: Capital expenditures were $40 2 million in the fourth quarter of 2023, compared with $34 1 million in 2020 to.

Robert Mehrabian: In terms of 2024 outcomes, we therefore think the quarterly sales and earnings ramp will be a bit greater than in recent years. So while we see annual 2024 sales growth of about 4%, we believe that the typically seasonally low first quarter will be slightly under $1.4 billion or roughly flat with the last quarter. I will now turn the call over to Edwin and George, who will further comment on the performance of our four, BusinessSync. Thank you, Robert.

Steve Blackwood: Appreciation and amortization expense was $77.4 million for the fourth quarter of 2023 compared with $81.8 million in 2022.

Steve: Depreciation and amortization expense was $77 4 million for the fourth quarter of 2023, compared with $81 8 million in 2022.

Steve: We ended the quarter with approximately $2 6 billion of net debt.

Steve Blackwood: We ended the quarter with approximately $2.60 billion of net debt.

Steve Blackwood: That is approximately $3.24 billion of debt, the last cash of $648.3 million.

Steve: That is approximately $3 to $4 billion of debt less cash of $648 three.

Steve: Yeah.

Steve Blackwood: Now turning to our outlook.

Steve: Now turning to our outlook manner.

Steve Blackwood: Management currently believes that GAAP earnings per share in the first quarter of 2024 will be in the range of $3.73.

Management currently believes that GAAP earnings per share in the first quarter of 2024 will be in the range of $3 73.

This is Edwin, and I will report on the digital imaging segment, which is 56% of TeleLens' portfolio. And like Teleline as a whole, this segment is a mix of longer cycle businesses such as defense, space, and healthcare, combined with shorter cycle markets including industrial automation, semiconductor inspection, and infrared components and cameras for applications ranging from factory condition monitoring to maritime navigation. Fourth quarter 2023 sales were slightly lower compared with last year, but double-digit sales growth in each of X-ray products, FLIR surveillance systems, and space-based infrared imaging detectors offset a significant year-over-year decline in sales of industrial imaging systems and microelectrical mechanical systems, or MEMS. Fourth quarter sales of unmanned systems were at their greatest level in 2023, but declined year over year due to a tough comparison. For the second quarter in a row, the FLIR businesses collectively were positive contributors to overall segment margin. In addition, FLIR quarterly sales increased year over year and were at the highest level in the last two years.

Steve Blackwood: for the $3.86.

Steve: $3 86.

Steve: With non-GAAP earnings in the range of $4 55.

Steve Blackwood: with non-GAAP earnings in the range of $4.55 to $4.65 per share.

Steve: To $4 65 per share.

Steve Blackwood: and for the full year of 2024, our GAAP earnings per share outlook is $17.15 to $17.53.

Steve: And for the full year of 2024, our GAAP earnings per share outlook is $17 15.

Steve: To $17 53.

Steve: And on a non-GAAP basis, $20 35 to $20 68.

Steve Blackwood: and on a non-GAAP basis, $20.35 to $20.68.

Steve: The 2020 for full year estimated tax rate excluding discrete items is expected to be 22, 5% I will now pass the call back to Robert.

Speaker Change: The 2024 full-year estimated tax rate, excluding discrete items, is expected to be 22.5%. I will now pass the call back to Robert.

Robert Mehrabian: Thank you, Steve.

Robert: Thank you Steve.

Robert Mehrabian: We would now like to take your questions. Tom, if you're ready to proceed with the questions and answers, please go ahead.

Robert: We would now like to take your questions. Tom If youre ready to proceed with the questions and answers. Please go ahead.

Tom: Thank you. Ladies and gentlemen on the phone lines, if you wish to ask a question today, please press 1 followed by the 0. Now you'll hear a tone indicating you've been placed in queue. You take yourself out of that queue by simply pressing the 1-0 command. Again, we ask you to please pick up your handset before pressing the buttons. Again, 1-0 for questions. We'll begin today with a question from Jim Ricchiuti representing Needham & Company. Please go ahead.

Tom: Ladies and gentlemen on the phone lines. If you wish to ask a question today. Please press one followed by the zero now Youll hear tone, indicating you've been placed in Q take yourself out of that Q by simply pressing the one zero command again.

Tom: And we ask you to please pick up your handset before pressing the button.

Speaker Change: One zero for questions. We will begin today with a question from Jim Ricchiuti, representing Needham <unk> Company. Please go ahead.

George will now report on the other three segments, which will represent the remaining 44% of talent. Thanks, Edmund. The instrumentation segment consists of our marine, test, and measurement, and environmental businesses, which contribute a little over 23% of the total. For the total segment, overall fourth quarter sales increased 2.8% versus last year. Sales of marine instruments increased 14.7% in the quarter, primarily due to strong offshore energy sales but also continued growth in global defense and ocean science. However, sales of electronic test and measurement systems, which include oscilloscopes, digitizers, and protocol analyzers, were flat year over year.

Jim Ricchiuti: Thank you. Good morning. I wanted to

<unk> good morning.

Wanted to.

Jim Ricchiuti: Let's see if we could dig a little bit more into the way you see the year unfolding. It sounds like Q1.

See if we could dig a little bit more into the way you see the year unfolding it sounds like Q1.

Jim Ricchiuti: A little bit more seasonality. And I guess with respect to the full year guidance, as you think about the balance of the year, are you making some assumptions of recovery in the shorter cycle business in the latter part of the year, particularly some of the areas that have been weaker, like the lab instrumentation and the industrial automation machine vision area?

A little bit more seasonality and I guess with respect.

Speaker Change: To the full year guidance.

Speaker Change: As you think about the balance of the year are you, making some assumptions of recovery in the shorter cycle business in the latter part of the year, particularly some of the areas that have been weaker like the it's a lab instrumentation in the industrial automation machine vision area.

Alright, good morning, Jim Yes, good morning.

Speaker Change: All right. Good morning, Jim. Yes. Good morning.

Speaker Change: We.

Speaker Change: We are right now expecting.

Speaker Change: We're right now expecting

Jim Ricchiuti: uptake in those businesses in the second half of the year.

Jim Ricchiuti: Uptake in those businesses in the second half of the year.

Jim Ricchiuti: We think that what will happen is that we will have a linear REM.

Jim Ricchiuti: We think that what we have done is that we didn't have a linear ramp in sales and earnings throughout the year.

Jim Ricchiuti: in sales and earnings throughout the year.

Jim Ricchiuti: with

Jim Ricchiuti: about average revenue increase of about 4%.

Overall instrumentation segment operating profit increased over 14% in the, with gap operating margin increasing 284 basis points to 27.1% and 278 basis points on a non-GAAP basis to 28.1%, both all-time records for the second. In the aerospace and defense electronics segment, which represents 13% of Teledyne sales, fourth quarter sales increased 3.4%, primarily driven by growth in commercial aerospace. Gap and non-gap segment operating profit decreased approximately 5% year-over-year, primarily due to a tough comparison with last year's all-time record.

Jim Ricchiuti: About average revenue increase of about 4%.

Jim Ricchiuti: and

Jim Ricchiuti: And.

Jim Ricchiuti: Earnings

Jim Ricchiuti: Earnings.

Jim Ricchiuti: as we've outlined, up to $20.68, which would reflect also an improvement in margin from this year to next year.

Jim Ricchiuti: We've outlined up to $20 968.

Jim Ricchiuti: Which would reflect also.

Jim Ricchiuti: The improvement in margin from this year to next year.

Jim Ricchiuti: of another almost 50 to 60 base.

Jim Ricchiuti: And others.

Jim Ricchiuti: Of those 50 to 60 basis points. So yes, we are anticipating that on the other hand, we are.

Jim Ricchiuti: So yes, we're anticipating that. On the other hand, we're also adjusting our cost structure. And if necessary, we'll do more.

Jim Ricchiuti: Answer adjusting our cost structure and if necessary, we'll do more so that.

Jim Ricchiuti: So that for earnings,

Jim Ricchiuti: Our earnings.

Jim Ricchiuti: remain housed.

Jim Ricchiuti: Remain healthy.

Jim Ricchiuti: Okay.

Jim Ricchiuti: Thank you for that Robert with respect to the the.

Speaker Change: Thank you for that, Robert. With respect to the margin improvement that you're anticipating, I'm wondering how should we think about margins by some of the major business units?

For the Engineered Systems segment, which contributes 8% to overall sales, fourth-quarter revenue decreased 3.8%, but operating profit increased with a margin of $325. I will now pass the call back to Robert. Thank you, George.

Jim Ricchiuti: The margin improvement that you're anticipating.

Jim Ricchiuti: I'm wondering how should we think about margins by by some of the major business units, yes too soon.

Speaker Change: Directionally.

Jim Ricchiuti: <unk>.

Robert Mehrabian: Sure. Jim, we're expecting margin improvement in every sector.

Jim Ricchiuti: Sure.

Speaker Change: Jim we're expecting margin improvement in every segment.

Speaker Change: A little lower in instruments, maybe 25 basis points.

Speaker Change: A little lower in <unk>.

Speaker Change: Instruments may be 25 basis points.

Speaker Change: We already have very healthy margins there.

Speaker Change: On the other hand, in digital imaging,

Speaker Change: On the other hand.

Speaker Change: In digital imaging.

Speaker Change: about the 80 basis points.

Speaker Change: About the 80 basis points.

Robert Mehrabian: In conclusion, we were pleased with our record performance in 2023, in the near term. We will continue to focus on growth in those businesses with favorable markets, while cutting costs and protecting margins in businesses which are more challenged, and at the same time, we'll be acquiring and integrating complementary When certain markets like laboratory instrumentation, industrial automation, or electronic tests and measurements recover, we will keep our cost structure in check and benefit from some. But if...

Speaker Change: in Aerospace and Defense.

Speaker Change: In aerospace and defense.

Speaker Change: We think we'll have 80 to 90 basis points.

Speaker Change: We think we have 80 to 90 basis points.

Speaker Change: and engineered systems that are on 50 basis points. So overall, Jim, in the segment,

Speaker Change: Engineered systems at around 50 basis points.

Speaker Change: Overall, Jim into segments, we anticipate about 70 basis points margin improvement and overall.

Speaker Change: We anticipate about 70 basis points margin improvement and overall

Speaker Change: for the company.

Speaker Change: For the company.

Speaker Change: between 50 and 60 basis.

Speaker Change: Between 50, and 60 basis points.

Speaker Change: In a way, it's kind of similar to what we achieved this year, which was about 60 basis points over the last year.

Speaker Change: In a way, it's kind of similar to what we achieved.

This year, which was.

Speaker Change: About 60 basis points over last year.

Speaker Change: Got it thank you I'll jump back in the queue. Thanks, a lot. Thank you Jim.

Speaker Change: Thank you. I'll jump back in the queue. Thanks a lot.

Speaker Change: Next, we'll go to the line of Greg Conrad with Jefferies. Please go ahead, sir.

Next we'll go to the line of Greg Konrad with Jefferies. Please go ahead Sir.

Greg Konrad: Good morning.

There are global or macroeconomic shocks in 2024. We will do what we've done in the past. Execute well, generate record cash flow, and complete some of our best and potentially larger acquisitions. I will now turn the call over to Steve. Thank you, Robert, and good morning. I will first discuss some additional financials for the quarter not covered by Robert, and then I will discuss our first quarter and full year 2024 outlook. In the fourth quarter, cash flow from operating activities was $164.4 million, compared with $237.7 million in 2022. Free cash flow, that is cash from operating activities less capital expenditures, was $124.2 million in the fourth quarter of 2023, compared with $203.6 million in 2022. Cash flow declined in the fourth quarter since we made $139 million of additional tax payments, which we were allowed to defer from the second and third quarters of 2023 due to IRS disaster relief.

Greg Konrad: Good morning.

Greg Konrad: Maybe just to follow up with the last question, but on the revenue side, you know, given the commentary around book-to-bail, you know, 4% growth for the year, can you maybe talk about the assumptions between long and short cycle or from a segment basis for growth in 2024? Sure.

Greg Konrad: Maybe just to follow up with the last question, but on the revenue side given the commentary around book to Bill 4% growth for the year can you maybe talk about the assumptions between long and short cycle or from a segment basis for growth in 2024.

Speaker Change: Yeah, Greg, let me, let me...

Speaker Change: Yeah, Greg Let me let me.

Speaker Change: give you the segments.

Speaker Change: Give you the segment first.

Speaker Change: <unk>.

Speaker Change: Ferg.

Speaker Change: And then I'll try and answer the first question.

Speaker Change: And then I'll try and answer this.

First question.

Speaker Change: From a segment perspective,

Speaker Change: From a segment perspective.

Speaker Change: We think instrumentation

Speaker Change: We think instrumentation.

Speaker Change: would grow about three and a half percent.

We grew about 10, 5% this year over last year.

Speaker Change: Over to the last.

Speaker Change: We think digital imaging

Speaker Change: We think digital imaging.

Speaker Change: Well, going back to the instrumentation,

Speaker Change: Going back to the instrumentation.

Speaker Change: There is a difference between the different businesses that we have. The marine businesses

Speaker Change: There is a difference between the different businesses that we have the marine businesses.

Speaker Change: Thank you very much.

Speaker Change: With healthy background backlog as George mentioned with grow about six to six 5%.

Speaker Change: with healthy backlog, as George mentioned, would grow about 6% to 6.5%, whereas environmental would be just under 3%, and we're expecting TNM to basically hold.

Whereas the environmental would be just under 3% then we're expecting PNM to basically hold.

Speaker Change: Going to Digital Energy

Turning to digital imaging.

Speaker Change: We believe that the overall sales increase would be above 4%.

Speaker Change: We believe that the overall.

Speaker Change: The increase would be about 4%.

Speaker Change: Aerospace and defense about 5%.

Speaker Change: Aerospace and Defense.

Speaker Change: about 5%.

Without these catch-up tax payments, quarterly cash flow would have been an all-time record. Capital expenditures were $40.2 million in the fourth quarter of 2023, compared with $34.1 million in 2022. Appreciation and amortization expense was $77.4 million for the fourth quarter of 2023, compared with $81.8 million in 2022. We ended the quarter with approximately $2.60 billion of net debt.

Speaker Change: Engineered systems above 4% and when you add all of that.

Speaker Change: Engineer Systems, about 4%, and when you add all of that up, we expect an average of about 4% at this time.

Expect an average of about 4% at this time.

And then in.

Speaker Change: And then, maybe if we can just dig into digital imaging a little bit more. I mean, the commentary and the release around product lines on the call was helpful, but is there any way just, you know, for Q4 and 2023 to kind of

Speaker Change: Maybe if we can just dig into digital imaging a little bit more I mean, the commentary in the release around product lines and are on the call was helpful. But is there any way just for Q4 and 2023 to kind of level set or put some numbers behind growth in <unk>.

Speaker Change: level setter put some numbers behind you know growth and space and healthcare versus you know maybe the declines you've seen in other parts of the portfolio

Speaker Change: And health care versus maybe the declines you've seen in other parts of the portfolio.

Speaker Change: Sure. Let me start with Q4, please, and then I'll go to some of the others.

That is approximately $3.24 billion of debt, and the last cash of $648.3 million. Now, turning to our outlook. Management currently believes that GAAP earnings per share in the first quarter of 2024 will be in the range of $3.73 to $3.86, with non-GAAP earnings in the range of $4.55 to $4.65 per share. For the full year of 2024, our GAAP earnings per share outlook is $17.15 to $17.53, and on a non-GAAP basis, $20.35 to $20.68. The 2024 full-year estimated tax rate, excluding discrete items, is expected to be 22.5%.

Speaker Change: Sure. Let me start with Q4, and then I'll go to some of the others.

Speaker Change: in healthcare.

Speaker Change: In.

Healthcare.

Speaker Change: We had.

Speaker Change: We had really nice Q4.

Speaker Change: Nice Q4.

Speaker Change: Revenue Increase

Speaker Change: Revenue increased.

Speaker Change: About.

Speaker Change: Thank you.

Speaker Change: 13.5% to 14%.

Speaker Change: <unk>, 9% to 14%.

Speaker Change: In aerospace and defense, it increased about 5%.

Speaker Change: In aerospace and defense it increased about 5%.

Speaker Change: These offset basically

Speaker Change: These offset basically.

Speaker Change: Weakness in our industrial and scientific vision

Speaker Change: Weakness in our industrial and science.

Speaker Change: <unk> systems.

Speaker Change: The flip side, if you go over to

Speaker Change: Flip side, if you go over to <unk>.

Speaker Change: are clear businesses.

Speaker Change: Our clear businesses.

We had really robust.

Speaker Change: We are really robust.

Speaker Change: growth in our surveillance system.

Speaker Change: Growth in our surveillance system.

Speaker Change: About 16 and a half percent.

Speaker Change: 16, 5%.

Speaker Change: Percent.

Speaker Change: And some of our detection products overall in Q4.

Speaker Change: and some of our detection products. Overall in Q4,

Overall fourth-quarter sales increased 2.8% versus last year. Sales of marine instruments increased 14.7% in the quarter, primarily due to strong offshore energy sales but also continued growth in global defense and ocean science. Sales of electronic testing measurement systems, which include oscilloscopes, digitizers, and protocol analyzers, were flat year over year.

Speaker Change: Fleer.

Speaker Change: Clear.

Speaker Change: Thank you very much.

Speaker Change: Revenue defense increased about four 8%.

Robert Mehrabian: I will now pass the call back to Robert. Thank you, Steve. We would now like to take your questions. Tom, if you're ready to proceed with the questions and answers, please go ahead. Thank you. Ladies and gentlemen on the phone lines, if you wish to ask a question today, please press 1, followed by 0. Now you'll hear a tone indicating you've been placed in queue. You can take yourself out of that queue by simply pressing the 1-0 command.

Speaker Change: Now,

Speaker Change: No.

Speaker Change: Going forward,

Speaker Change: Going for forward.

Speaker Change: for the

Speaker Change: Sure.

Speaker Change: To the future.

Speaker Change: I'll make a little distinction between...

Speaker Change: I'll make a little distinction between.

Speaker Change: D'Also, E2V, and FLIR.

Speaker Change: The onsite.

We continue to see some softness in sales of analyzers for electronic storage and data centers, but this was largely offset by continued strong sales of oscilloscopes and a small amount of incremental sales from the Xenac. Sales of environmental instruments decreased 7.3%, with greater sales of air quality and gas and flame safety analyzers, more than offset by lower sales of drug discovery and laboratories. Overall Instrumentation Segment Operating profit increased over 14%, with GAAP operating margin increasing 284 basis points to 27.1% and 278 basis points on a non-GAAP basis to 28.1%, both all-time records for the second, in the Aerospace and Defense Electronics segment, which represents 13% of Teledyne sales. Fourth quarter sales increased 3.4%, primarily driven by growth in commercial aerospace. Gap and non-gap segment operating profit decreased approximately 5% year-over-year, primarily due to a tough comparison with last year's all-time record.

Speaker Change: <unk> and <unk>.

Speaker Change: <unk>.

Speaker Change: We think that DALSA-E2V

Speaker Change: We think that the I'll say <unk>.

Speaker Change: would have a modest growth of about 3%.

Speaker Change: Would have a modest growth of about 3%.

Speaker Change: offset by about 4.5% in FLIR.

Speaker Change: Offset by about four 5% in player.

Speaker Change: as mentioned earlier.

Speaker Change: As mentioned earlier.

Speaker Change: Thank you very much.

Speaker Change: <unk>.

Speaker Change: Clear defense, especially is.

Speaker Change: Player Defense Specialty,

Operator: Again, we ask you to please pick up your handset before pressing the buttons. Again, 1-0 for questions. We'll begin today with a question from Jim Ricchiuti representing Needham & Company. Please go ahead. Thank you. Good morning.

Speaker Change: As we are experiencing really good.

Speaker Change: is experiencing really good

Speaker Change: Order, Intake.

Speaker Change: Order intake.

Speaker Change: and

And.

Speaker Change: We expect the growth there to exceed that of the rest of the image.

Speaker Change: We expect the growth there to exceed that of the rest of the imaging.

Speaker Change: So,

Speaker Change: So I.

Speaker Change: I can give you more detail, but that's basically a summary of

I can give you more details, but that's basically a summary of it.

Speaker Change: I appreciate it I'll leave it at two thank you.

Speaker Change: Appreciate it. I'll leave it at two. Thank you.

Jim Ricchiuti: I wanted to, Let's see if we could dig a little bit more into the way you see the year unfolding. It sounds like Q1. A little bit more seasonality. And I guess with respect to the full-year guidance, as you think about the balance of the year, are you making some assumptions about recovery in the shorter cycle business in the latter part of the year, particularly some of the areas that have been weaker, like the lab instrumentation and the industrial automation machine vision area? All right. Good morning, Jim.

Speaker Change: Thank you.

Speaker Change: And we'll go to the line of Ron Epstein with Bank of America. Please go ahead.

Speaker Change: Well go to line of Ron Epstein with Bank of America. Please go ahead.

Speaker Change: Hey, good morning. This is Jordan Lainez on Ferran. I wanted to ask, so for the backlog growth and the defense wins that you guys are seeing, how are you guys thinking about the risk of a CR?

Speaker Change: Hi, Good morning. This is Jordan line is on for Ron.

Jordan: I wanted to ask so for the backlog growth in the defense wins that you guys are seeing.

Jordan: How are you guys thinking about the risk of a C. R.

For the engineered systems segment, which contributes 8% to overall sales, fourth-quarter revenue decreased 3.8%, but operating profit increased with a margin of up 325%. I will now pass the call back to Robert. Thank you, George.

Jordan: Well.

Speaker Change: Well,

Speaker Change: Jordan, obviously, PR is always an unpleasant occurrence for us.

Jordan: Sure they are not obviously.

Jordan: It's always an unpleasant.

Jordan: Occurrence for us.

The way we're looking at it is.

Speaker Change: The way we're looking at it is we're only right now considering the orders that we have in-house.

Jordan: With only right now considering the orders that we have in the crowd.

Robert Mehrabian: Yes. Good morning. We're right now expecting an uptake in those businesses in the second half of the year. We think that what will happen is that we will have a linear REM in sales and earnings throughout the year, with an average revenue increase of about 4%, and earnings, as we've outlined, up to $20.68, which would reflect also an improvement in margin from this year to next year of another almost 50 to 60 basis. So yes, we're anticipating that.

Robert Mehrabian: In conclusion, we were pleased with our record performance in 2023. In the near term, we will continue to focus on growth in those businesses with favorable markets while cutting costs and protecting margins in businesses that are more challenged. And at the same time, we'll be acquiring and integrating complementary businesses. When certain markets like laboratory instrumentation, industrial automation, or electronic tests and measurements recover, who will keep our co-structure in check and benefit? Hanson

Speaker Change: We're not really looking at future orders.

We're not really looking at future orders.

Speaker Change: So, Book to Build has been healthy. This is our longer-term program. And frankly, we have some exciting new products coming out.

Book to Bill has been healthy discharged longer term program.

Jordan: And frankly, we have some exciting new products coming out.

Speaker Change: which are being now tested. For example, if you look at

Jordan: Which are being tested.

Jordan: For example.

Jordan: If you look at.

Jordan: Our black Hornet.

Speaker Change: or Black Hornet.

Speaker Change: Black Hornet 3, which is our nano drones.

Jordan: We black Hornet, three which is our nano.

Jordan: Drones.

Speaker Change: Black Hornet III has had a really good run over the past five, six years. We've introduced a Black Hornet IV.

Jordan: <unk> three has had a really good run.

Jordan: The past five six years, we've introduced a black Hornets for.

Speaker Change: which is already getting traction.

Jordan: Which is already getting traction.

Speaker Change: We also have some really nice programs.

Steve: But if... there are global or macroeconomic shocks in 2024. We will do what we've done in the past. We will execute well, generate record cash flow, and complete some of our best and potentially larger acquisitions. I will now turn the call over to Steve. Thank you, Robert, and good morning. I will first discuss some additional financials for the quarter not covered by Robert, and then I will discuss our first quarter and full year 2024 outlook. In the fourth quarter, cash flow from operating activities was $164.4 million, compared with $237.7 million in 2022. Free cash flow, that is cash from operating activities less capital expenditures, was $124.2 million in the fourth quarter of 2023, compared with $203.6 million in 2022. Cash flow declined in the fourth quarter since we made $139 million of additional tax payments, which we were allowed to defer from the second and third quarters of 2023 due to IRS disaster relief.

Jordan: We also have some really nice programs in space.

Robert Mehrabian: On the other hand, we're also adjusting our cost structure, and if necessary, we'll do more so that earnings remain housed.

Speaker Change: in Space Development Agency, Trunch True, Tracker, Tracking Layer,

Jordan: Space Development agency tranche true tracker tracking layer.

Speaker Change: as well as our international sales.

Jordan: As well as our international sales.

Robert Mehrabian: Thank you for that, Robert. With respect to the margin improvement that you're anticipating, I'm wondering how we should think about margins by some of the major business units. Directionally,

Speaker Change: in that domain are healthy, so in some ways,

In that domain are healthy.

Jordan: In some ways.

Speaker Change: while C.R. would be

Wild CR would be.

Speaker Change: Knuth.

Not a pleasant thing to experience we've done it in the past we've had crs.

Speaker Change: A pleasant thing to experience. We've done it in the past. We've had CRs in many years. Right now we're looking at what we have in our backlog, which is helpful.

Jordan: And many years right now we're looking at what we have.

Robert Mehrabian: Sure. Jim, we're expecting margin improvement in every sector. A little lower in instruments, maybe 25 basis points. We already have very healthy margins there. On the other hand, in digital imaging, about 80 basis points in Aerospace and Defense.

Jordan: In our back backlog, which is healthy.

Speaker Change: Got it. Thank you and then on the unmanned systems are systems that you guys cited as being lower for di.

Speaker Change: Got it. Thank you. And then on the unmanned systems, air systems that you guys cited as being lower for DI, is that related to just

Speaker Change: Is that related to just.

Speaker Change: Sunsetting Programs, or what was driving that change?

Speaker Change: Sunsetting programs or what was driving that change.

Robert Mehrabian: We think we'll have 80 to 90 basis points and engineered systems that are on 50 basis points. So overall, Jim, in the segment, we anticipate about 70 basis points of margin improvement and, overall, for the company, between 50 and 60 basis points. In a way, it's kind of similar to what we achieved this year, which was about 60 basis points higher than last year. Thank you. I'll jump back in the queue. Thanks a lot. Next, we'll go to the line with Greg Conrad and Jefferies. Please go ahead, sir.

Speaker Change: Sure.

Speaker Change: I think

Speaker Change: I think.

Speaker Change: Sure.

Speaker Change: Basically,

Speaker Change: Basically.

Speaker Change: It's tough comps rather than real decline.

Speaker Change: I think we think our

Speaker Change: I think.

Speaker Change: We think our.

Speaker Change: Drone businesses are healthy. We also have some businesses that are anti-drone or drone detection.

Speaker Change: Drawn businesses are healthy we also have some businesses that.

Speaker Change: Our anti drawn our drone detection systems, which.

Steve: Without these catch-up tax payments, quarterly cash flow would have been an all-time record. Capital expenditures were $40.2 million in the fourth quarter of 2023, compared with $34.1 million in 2022. Appreciation and amortization expense was $77.4 million for the fourth quarter of 2023, compared with $81.8 million in 2022. We ended the quarter with approximately $2.60 billion of net debt.

Speaker Change: which we're selling in Europe, which are very healthy.

Speaker Change: We are selling in Europe, which are very healthy.

Speaker Change: So I think it's just a matter of tough comps. Other than that, we feel very good about our

Speaker Change: It's just a matter of tough comps other than that we feel very good about our drug businesses.

Speaker Change: Great. Thank you so much.

Speaker Change: Great. Thank you so much thank you.

Speaker Change: Thank you.

Speaker Change: Q.

Speaker Change: Next question from the line of Joe Girardo with TD Pollen. Please go ahead.

Speaker Change: And final question from the line of Jos.

Speaker Change: <unk> with TD pollen. Please go ahead.

Joseph Giordano: Hey guys, close enough there. How you doing?

Jos: Hey, guys close enough there how.

Speaker Change: How are you doing.

Speaker Change: Good job, good.

Speaker Change: Good Joe.

Steve: That is approximately $3.24 billion of debt, and the last cash of $648.3 million. Now turning to our Outlook, management currently believes that GAAP earnings per share in the first quarter of 2024 will be in the range of $3.73. $3.86, with non-GAAP earnings in the range of $4.55 to $4.65 per share. For the full year of 2024, our GAAP earnings per share outlook is $17.15 to $17.53, and on a non-GAAP basis, $20.35 to $20.68. The 2024 full-year estimated tax rate, excluding discrete items, is expected to be 22.5%.

Speaker Change: Good.

Speaker Change: I'll start on free cash flow. I think that at the end of the day that probably came in a little lighter than you thought for the full year.

Speaker Change: Can you all start on free cash flow I think that at the end of the day that probably came in a little lighter than you thought for the full year.

Good morning. Maybe just to follow up with the last question, but on the revenue side, you know, given the commentary around book-to-bail, you know, 4% growth for the year, can you maybe talk about the assumptions between long and short cycle or from a segment basis for growth in 2024? Sure. Yeah, Greg, let me, let me... give you the segments. Ferg.

Speaker Change:

Speaker Change: Can you talk about how you think 24 shapes up and how.

Speaker Change: Can you talk about how you think 24 shapes up and how working capital looks for the year?

Speaker Change: Our working capital it looks for the year.

Speaker Change: Yeah, you're right. It came in a little lightish. But we made some really good progress in the third quarter and especially in the fourth quarter.

Speaker Change: Yeah, Youre right. It came in a little light.

Speaker Change: But we made some really good progress.

Speaker Change: In the third quarter, and especially in the fourth quarter.

Speaker Change: From our managed working capital perspective, we had some significant improvements in our trying to reduce our inventory.

Speaker Change: <unk> managed working capital perspective, we had some significant improvements in our job trying to reduce our inventory.

Robert Mehrabian: And then I'll try and answer the first question. From a segment perspective, we think instrumentation will grow about three and a half percent. Over to the last. We think digital imaging. Well, going back to the instrumentation, there is a difference between the different businesses that we have. The marine businesses, Thank you very much, with healthy backlog, as George mentioned, would grow about 6% to 6.5%, whereas the environmental business would be just under 3%, and we're expecting TNM to basically hold. Going to Digital Energy, we believe that the overall sales increase would be above 4%. Aerospace and Defense, about 5%. Engineered Systems, about 4%, and when you add all of that up, we expect an average of about 4% at this time. And then, maybe we can just dig into digital imaging a little bit more.

Speaker Change: The flip side is we also did not, you know, we're always like most companies suffering from not being able to get cash for our R&D.

Speaker Change: The flip side is we also.

Speaker Change: <unk> did not.

Speaker Change: Like most companies suffering from not being able to get cash for R&D.

Speaker Change: So I'd say about that affected us maybe 75 or 60 to 75 million dollars.

Speaker Change: So I would say.

Speaker Change: That affected us, maybe 75 or 60% to $75 million.

Speaker Change: Thank you.

Speaker Change: Bob.

Speaker Change: Our cash Nevertheless, if you looked at it.

Speaker Change: Our cash, nevertheless, if you looked at it,

Speaker Change: We paid Don $680 million of debt.

Speaker Change: We paid down $680 million of debt in 2023.

Speaker Change: in 2023.

Speaker Change: Our debt to EBDA ratio, net debt to EBDA ratio is about 1.9.

Speaker Change: Our debt to EBITDA ratio net debt to EBITDA ratio is about one nine.

Speaker Change: So let me fast forward to 2024.

Speaker Change: We believe we'll do a little better in 2024 than we did in 2023.

Speaker Change: We believe we will do a little better in 2024 than we did in 2023.

Speaker Change: We'd like to think that we'd have a 100% conversion.

We'd like to think that we would have 100% conversion.

Speaker Change: recognizing that there is always going to be this R&D headwind, even though everybody in the Congress has agreed that the R&D

Speaker Change: Recognizing that there is always going to be this RMB headwind, even though everybody in Congress has agreed that the RMB.

Speaker Change: Program should be passed. I think nothing's passing in this Congress, so we're assuming we don't get that. Nevertheless, we think we'll be somewhere between $900, $925, and a billion dollars.

Speaker Change: Program should be passed I think nothing's passing in this Congress. So we're not we're assuming we don't get that Nevertheless, we think we'll be somewhere between $909 $25 billion.

Jim Ricchiuti: Again, and we ask you to please pick up your handset before pressing the buttons. Again, 1-0 for questions. We'll begin today with a question from Jim Ricchiuti, representing Needham & Company. Please go ahead. Thank you. Good morning.

Robert Mehrabian: I wanted to... Let's see if we can dig a little bit more into the way you see the year unfolding. It sounds like Q1, with a little bit more seasonality. And I guess with respect to the full-year guidance, as you think about the balance of the year, are you making some assumptions about recovery in the shorter cycle business in the latter part of the year, particularly some of the areas that have been weaker, like the lab instrumentation and the industrial automation machine vision area? Good morning, Jim.

Speaker Change: If we hit those numbers,

Robert Mehrabian: I mean, the commentary and the release around product lines on the call was helpful, but is there any way just, you know, for Q4 and 2023 to kind of, level setter, put some numbers behind growth and space and healthcare versus, you know, maybe the declines you've seen in other parts of the portfolio? Sure. Let me start with Q4, please, and then I'll go to some of the others in healthcare. We had a really nice Q4 revenue increase. Thank you. 13.5% to 14%. In aerospace and defense, it increased by about 5%.

Speaker Change: If we hit those numbers.

Speaker Change: which we think we will.

Speaker Change: Which we think we will.

Speaker Change: Then our debt-to-EPTA ratio should go down from 1.9 to closer to 1.1 to 1.2.

Speaker Change: And then our debt to EBITDA ratio should go down from one 9% to closer to one one to one two.

Speaker Change: which puts us in a really good position to be able to make

Speaker Change: Which is which puts us in a really good position to be able to make.

Speaker Change: Both small and mid sized acquisition.

Speaker Change: both small and mid-sized actors.

Speaker Change: Yes.

Speaker Change: That's a really helpful caller. My last one, you know, we kind of talked about DI a lot, but I just want to...

Speaker Change: That's really helpful color.

Speaker Change: My last one.

Speaker Change: Kind of talked about DIY, but I just wanted to.

Speaker Change: maybe if you can frame for the full year of 23

Maybe if you can frame for the full year of 'twenty three.

Speaker Change: Like how did.

Speaker Change: like how did

Speaker Change: How much down was like the industrial and scientific vision and what did that do to margins and then how did FLIR margins for the full year look year on year?

Speaker Change: How much down was the industrial and scientific vision and what did that do to margins and then how did full year margin for the full year look year on year.

Robert Mehrabian: Yes. Good morning. We're right now expecting an uptake in those businesses in the second half of the year. We think that what will happen is that we will have a linear ramp in sales and earnings throughout the year, an average revenue increase of about 4%, and Amen, as we've outlined, up to $20.68, which would reflect also an improvement in margin from this year to next year of another almost 50 to 60 basis. So yes, we're anticipating that.

Speaker Change: Okay.

Speaker Change: Let me just pick the first part. Industrial and scientific visions, I'm going to say we're down about 2%.

Robert Mehrabian: These offset basically, weakness in our industrial and scientific vision. The flip side, if you go over to, are clear businesses. We are really robust with growth in our surveillance system. About 16 and a half percent and some of our detection products. Overall in Q4, Fleer. Thank you very much. Now, going forward, for the future. I'll make a little distinction between... D'Also, E2V, and FLIR. We think that DALSA-E2V would have a modest growth of about 3%, offset by about 4.5% in FLIR, as mentioned earlier. Thank you very much.

Let me, let me just pick the first part industrial and scientific vision.

I'm going to say, we're down about 2%.

Speaker Change: year over year.

Speaker Change: Year over year.

Speaker Change: Larger declines in Q4 than that.

Speaker Change: Uh,

Speaker Change: Sure.

Speaker Change: In terms of the margins,

Speaker Change: In terms of.

Speaker Change: The margins.

Speaker Change: Fleer's margins actually improved significantly.

Speaker Change: Our <unk> margins actually improved significantly.

Speaker Change: year over year. He went from

Speaker Change: Year over year.

Speaker Change: It went from.

Speaker Change: 20.3%.

Speaker Change: 23%.

Speaker Change: in 2022.

Speaker Change: In 2022.

Speaker Change: to 22.1%.

Speaker Change: Two of 22, 1%.

Robert Mehrabian: On the other hand, we're also adjusting our cost structure, and if necessary, we'll do more so that our earnings remain healthy. Kind of a thank you for that, Robert. With respect to the margin improvement that you're anticipating, I'm wondering how we should think about margins by some of the major business units. Directionally.

Speaker Change: In 2023.

Speaker Change: in 2023.

Speaker Change: Which was very healthy as a consequence.

Speaker Change: which was very healthy. As a consequence, we were able to hold the overall margins in digital imaging relatively flat.

Speaker Change: We were able to hold the overall margins in digital imaging relatively flat.

Robert Mehrabian: Player Defense Specialty is experiencing really good Order, Intake, and We expect the growth there to exceed that of the rest of the image. So, I can give you more detail, but that's basically a summary of, Appreciate it. I'll leave it at two.

Speaker Change: And you would expect FLIR to expand margins again in 'twenty four correct just inherent in that margin commentary, yes, yes, we think.

Speaker Change: And you'd expect FLIR to expand margins again in 2024, correct? Just inherent in that margin commentary? Yes, we think FLIR would have some margin expansion, but if you look at it as a whole segment,

Speaker Change: Clear would have some margin expansion, but if you look at it as a whole.

Robert Mehrabian: Sure. Jim, we're expecting margin improvement in every sector. A little lower in instruments, maybe a 25 basis points improvement.

Speaker Change: Segment.

Speaker Change: That is our job.

Speaker Change: Thank you very much.

Speaker Change: Digital imaging segment, we expect margins to increase somewhere between 50 and 100 basis points in 2024.

Thank you. Thank you. And we'll go to the line for Ron Epstein with Bank of America. Please go ahead. Hey, good morning. This is Jordan Lainez on Ferran.

Speaker Change: Huston,

Robert Mehrabian: We already have very healthy margins there. On the other hand, in digital imaging... about 80 basis points in Aerospace and Defense. We think we'll have 80 to 90 basis points, and engineered systems that are on 50 basis points. So overall, Jim, in the segment.

Speaker Change: Perfect. Thanks, Robert.

Speaker Change: Thank you.

Robert: Thank you.

Speaker Change: Next, let's go to the line of Kristine Liwag representing Morgan Stanley. Please go ahead.

Speaker Change: Next let's go to the line of Kristina <unk>, representing Morgan Stanley. Please go ahead.

Ron Epstein: I wanted to ask, so for the backlog growth and the defense wins that you guys are seeing, how are you guys thinking about the risk of a CR? Well, Jordan, obviously, PR is always an unpleasant occurrence for us. The way we're looking at it is we're only right now considering the orders that we have in-house. We're not really looking at future orders. So, Book to Build has been healthy.

Kristina: Hey, good morning, everyone.

Kristine Liwag: Good morning, everyone.

Speaker Change: Good morning, Chris.

Kristina: Good morning treatment.

Kristine Liwag: Robert, last year you talked about some facility consolidation at digital imaging, and you're also talking about 80 basis points in margin expansion this year for the segment. How much of that is from this consolidation from before on the FLIR integration, and how much of that is on better price cost? And ultimately, could we expect to see higher margins there if you have additional cost takeout you could do this year?

Kristina: Robert You know last year, you talked about some facility consolidation of digital imaging and you're also talking about 80 basis points in margin expansion. This year for the segment how much of that is.

Greg Konrad: We anticipate about 70 basis points of margin improvement and overall, for the company, uh... between fifty and sixty days. In a way, it's kind of similar to what we achieved this year, which was about 60 basis points over last year. Thank you. I'll jump back in the queue. Thanks a lot. Next, we'll go to the line with Greg Konrad and Jeffries.

Kristina: From the.

Kristina: This consolidation from before on on the integration and how much of that is on better price cost and ultimately could we expect to see higher margin. There. If you have additional cost take out you could do it.

This is our longer-term program. And frankly, we have some exciting new products coming out, which are now being tested. For example, if you look at or Black Hornet.

Robert Mehrabian: Please go ahead, sir. Good morning. Maybe just to follow up with the last question, but on the revenue side, given the commentary around book to bail, 4% growth for the year, can you maybe talk about the assumptions between long and short cycle or from a segment basis for growth in 2024? Yeah, Greg, let me, let me, give you the segment, and then I'll try and answer the first question. From a segment perspective, with the instrumentation, it would grow about three and a half percent. Now, over to you, with Think Digital Imaging. Well, going back to instrumentation... There's a difference between the different businesses that we have. The marine businesses... of the United States, with a healthy background and backlog, as George mentioned, would grow about 6% to 6.5%, whereas the environmental would be just under 3%.

Speaker Change: Yes, Christine let me see if I can do this properly.

Robert Mehrabian: Yeah, Kristine, let me see if I can do this properly.

Speaker Change: We are.

Robert Mehrabian: We are in the process, for example, now in terms of space consolidation.

Speaker Change: We are.

Speaker Change: In the process for example, now in terms of space consolidation, what we're doing is we're getting out of.

Robert Mehrabian: Black Hornet 3, which is our nano drone, has had a really good run over the past five, six years. We've introduced Black Hornet IV, which is already getting traction. We also have some really nice programs in Space Development Agency, Trunch True, Tracker, Tracking Layer, as well as our international sales in that domain are healthy, so in some ways, while C.R. Would be a pleasant thing to experience, Knuth.

Robert Mehrabian: What we're doing is we're getting out of leased spaces and moving to owned spaces. For example, in Massachusetts, we have an owned space in Barrica. We're getting out of a leased space there. That should be effective in March. That will help us save something of the order of $500,000, $600,000, $700,000.

Speaker Change: Lease basis moving to on spaces for example in Massachusetts.

Speaker Change: We have an own space in Bev Rico, where.

Speaker Change: Getting out of our lease space, there and that should be effective in March.

Speaker Change: That will help us.

Speaker Change: Say something of the order of 500 600 $700000.

Speaker Change: Doug.

Sure.

Robert Mehrabian: The issue that we have, while consolidation overall is helpful,

Speaker Change: The issue that we have while consolidation overall these have form.

Robert Mehrabian: It's the growth.

Speaker Change: Is the growth.

Robert Mehrabian: We've done it in the past. We've had CRs for many years. Right now, we're looking at what we have in our backlog, which is helpful.

Robert Mehrabian: of our businesses and the lower cost.

Speaker Change: All of our businesses.

Speaker Change: And the lower costs.

Robert Mehrabian: that we have put in place this year that should be more helpful so when Edwin thinks about or talks about margin improvement

Speaker Change: We have put in place this year that should be more helpful.

Speaker Change: When Edwin thinks about or talks about margin improvement.

Thank you. And then on the unmanned systems and air systems that you guys cited as being lower for DI, is that related to just sunsetting programs, or what was driving that change? I think, Basically, it's tough comps rather than real decline. I think we think our drone businesses are healthy. We also have some businesses that are anti-drone or drone detection, which we're selling in Europe, which are very healthy. So I think it's just a matter of tough competition.

Robert Mehrabian: He is looking at

Speaker Change: He is looking at.

Speaker Change: Really and lower cost structure, which we've achieved mains.

Robert Mehrabian: really a lower cost structure which we've achieved.

Robert Mehrabian: maintaining that and getting some growth especially from our longer cycle

Speaker Change: Maintaining that.

Speaker Change: And getting some growth, especially from our long cycle longer cycle businesses.

Robert Mehrabian: So it's a combination of those, I would say, lower cost,

Speaker Change: So it's a combination of those I would say lowered costs.

Robert Mehrabian: And we're expecting TNM to basically hold, point to digital images. We believe that the overall sales increase would be above 4%. Aerospace and Defense, about five percent, engineering systems, about four percent, and when you add all of that up, we expect an average of about four percent at this time. And then maybe we can just dig into digital imaging a little bit more.

Robert Mehrabian: and growth

Speaker Change: And growth.

Robert Mehrabian: Tromping, Just Space Consolidation.

Speaker Change: Trumping.

Speaker Change: Just space consolidation.

Robert Mehrabian: Other than that, we feel very good about our Great. Thank you so much. Thank you. Next question from the line of Joe Girardo with TD Pollen.

Speaker Change: Thanks, great caller. And in terms of industrial automation and the laboratory instrumentation markets, you've talked about a rebound for the second half of the year. What metrics are you looking at? What indicators are you following that you're watching out for for this end market?

Speaker Change: Thanks, Great color.

Speaker Change: And in terms of industrial automation in the laboratory instrumentation market, you've talked about a rebound for the second half of the year.

Joseph Giordano: Please go ahead. Hey guys, I'm close enough there. How are you doing?

Speaker Change: Metrics are you looking at.

Speaker Change: What indicators are you following.

Robert Mehrabian: I mean, the commentary and the release around product lines and on the call was helpful. But is there any way just, you know, for Q4 and 2023 to kind of, level setter, put some numbers behind, you know, growth and space and healthcare versus, you know, maybe the declines you've seen in other parts of the portfolio. Sure, let me start with Q4, please, and then I'll go to some of the others.

Speaker Change: Two that youre watching out for all for this end market.

Joseph Giordano: Good job, good. I'll start on free cash flow. I think that, at the end of the day, that probably came in a little lighter than you thought for the full year.

Speaker Change: for

Speaker Change: Four.

Speaker Change: Industrial automation greatly.

Speaker Change: Industrial automation really

Can you talk about how you think 24 shapes up and how working capital looks for the year? Yeah, you're right. It came in a little light.

Speaker Change: It's

Speaker Change: It's.

Speaker Change: it's a combination of

Speaker Change: It's a combination of things.

Speaker Change: We're seeing, for example, some improvement in the semi-market now, projections for improved semi-market recovery.

Speaker Change: We are seeing for example, some improvement in the semi market projections for improved semi market recovery.

Robert Mehrabian: But we made some really good progress in the third quarter and especially in the fourth quarter. From our managed working capital perspective, we had some significant improvements in our efforts to reduce our inventory. The flip side is we also did not, you know; we're always, like most companies, suffering from not being able to get cash for our R&D. So I'd say that affected us maybe 75 or 60 to 75 million dollars. Thank you. Our cash, nevertheless, if you looked at it, we paid Don $680 million in debt in 2023. Our debt to EBDA ratio, or net debt to EBDA ratio, is about 1.9. So, let me fast forward to 2024.

Speaker Change: We'll also...

Speaker Change: We are.

Speaker Change: Also.

Speaker Change: Seeing some pickup in smartphones now, which is our consumer related businesses, which effects micro electromechanical mens.

Speaker Change: Seeing some pickup in smartphones now, which is our consumer-related businesses, which affects our microelectromechanical MEMS programs.

Robert Mehrabian: In health care, we had a really nice Q4, about thirteen and a half to fourteen percent. In aerospace and defense, it increased about 5%. These offset, basically, weakness in our industrial and scientific visions. The flip side, if you go over to, are now clear businesses.

Speaker Change: Programs.

Speaker Change: in the room.

Speaker Change: In the.

Speaker Change: Other markets, especially laboratory instrumentation, we don't have as much visibility frankly.

Speaker Change: Other markets, especially laboratory instrumentation, we don't have as much visibility, frankly, we don't have as much visibility, frankly,

Speaker Change: Sure.

Speaker Change: We haven't seen these kinds of declines before, so we think

Speaker Change: We haven't seen these kinds of declines before so.

Speaker Change: We think.

Speaker Change: Those should come back, but we're not counting on them a lot. We think there's a flip side of our environmental businesses, which

Robert Mehrabian: We are really robust, growing our surveillance system but 16.5% and some of our detection products overall in Q4. Revenue Defense increased about 4.8%. Now...

<unk> come back, but we're not counting on them a lot. We think there's a flip side of our environmental businesses, which is that's a part of which is the air.

Speaker Change: That's a part of, which is the air and air quality, water quality monitoring, which have been very healthy. We have a nice backlog and

Speaker Change: Air quality water quality monitoring.

Speaker Change: <unk>, which have been very healthy we have a nice backlog.

We believe we'll do a little better in 2024 than we did in 2023. We'd like to think that we'd have a 100% conversion, recognizing that there is always going to be this R&D headwind, even though everybody in Congress has agreed that the R&D Program should be passed. I think nothing's passing in this Congress, so we're assuming we don't get that.

Robert Mehrabian: Going forward, for the future, I'll make a little distinction between dossier, E2V, and Flair.

Speaker Change: We think the combination of those two will help us in that part of our instrumentation.

Speaker Change: We think the combination of those two will help us in.

Speaker Change: In that part of our instrumentation business.

Robert Mehrabian: We think that DALSA A2V would have a modest growth of about three percent, offset by about four and a half percent in flares. As mentioned earlier, players of defense, especially, are experiencing really good performance, and we expect the growth there to exceed that of the rest of the image. So. I can give you more detail, but that's basically a summary of it. Appreciate it. I'll leave it at two.

Speaker Change: Thank you and last question for me I mean, your current leverage position gives you flexibility to pursue more sizeable deals I mean, you've recently closed <unk> acquisition, but.

Speaker Change: Thank you. And last question for me. I mean, your current leverage position gives you flexibility to pursue more sizable deals. I mean, you've recently closed the Xena acquisition. But in terms of larger deals, are valuations starting to look more attractive? And how is the 2024 pipeline shaping up?

Speaker Change: But in terms of larger deals our valuation starting to look more attractive and how is the 2024 pipeline is shaping up.

Nevertheless, we think we'll be somewhere between $900, $925, and a billion dollars. If we hit those numbers, which we think we will, then our debt-to-EPTA ratio should go down from 1.9 to closer to 1.1 to 1.2, which puts us in a really good position to be able to make both small and mid-sized actors. That's a really helpful caller.

Speaker Change: Yes.

Speaker Change: Yeah, I have to tell you, valuations on the larger...

Speaker Change: I have to tell yet valuations on the larger job.

Speaker Change: Deals have not come down yet as much as we would like. We've looked at some of the

Speaker Change: Deals.

Speaker Change: Have not come down yet as much as we would like our we've looked at some of the.

Speaker Change: and all of our competitors have paid for large ones, those are kind of out of our list.

Speaker Change: Prices that our competitors have paid for large loans.

Thank you. Thank you. And we'll go to the line of Ron Epstein with Bank of America. Please go ahead. Hey, good morning. This is Jordan Lynaise on Foron. I wanted to ask, so for the backlog growth and the defense wins that you guys are seeing, how are you guys thinking about the risk of a CR? Giordano.

Speaker Change: Those are kind of auto far.

Speaker Change: out of our range of what we would consider.

Speaker Change: <unk>.

Speaker Change: The range of what we would consider.

Speaker Change: On the flip side,

Speaker Change: On the flip side.

Speaker Change: We see some opportunities in smaller bolt-on acquisitions, what we call string of pearls.

My last one, you know, we kind of talked about DI a lot, but I just want to.., maybe if you could frame for the full year of 23, like how did the industrial and scientific vision do to margins, and then how did FLIR margins for the full year look year on year? Okay. Let me just pick the first part.

Speaker Change: We see some opportunities in small niche bolt on acquisitions, while we call single pearls.

Speaker Change: which are available and we will be pursuing those if you looked at our

Speaker Change: Which.

Speaker Change: Are available and we will be pursuing dose.

Robert Mehrabian: Obviously, PR is always an unpleasant occurrence for us. The way we're looking at it is we're only right now considering the orders that we have in house. We're not really looking at future orders. So Book to Bill has been good.

Speaker Change: If you looked at our <unk>.

Speaker Change: 68, 69 acquisitions over our history, the string of pearls are about 60 out of 68, 69.

Speaker Change: 68, 69 acquisitions over our history. The string of pearls are about 660 out of 68 69.

Speaker Change: They are the easiest to integrate.

Speaker Change: Bob.

Speaker Change: We can fit them in and we can improve their margins as we go. The larger deals, we have to be a little more patient because right now prices are still pretty high.

Speaker Change: We can fit them in and we can improve their margins as we go the larger deals we have to be a little more patient because right now.

Robert Mehrabian: Industrial and scientific visions, I'm going to say we're down about 2%, year over year. Larger declines in Q4 than that. Uh, in terms of the margins, Fleer's margins actually improved significantly, year over year. He went from 20.3% in 2022 to 22.1% in 2023, which was very healthy. As a consequence, we were able to hold the overall margins in digital imaging relatively

Robert Mehrabian: These are longer-term programs. And frankly, we have some exciting new products coming out, which are now being tested, for example, if you look at... or Black Hornet. We have Black Hornet 3, which is our nano drone. Black Hornet 3 has had a really good run over the past 5-6 years.

Speaker Change: Prices are still pretty high.

Speaker Change: Thank you very much for all the color.

Speaker Change: first-year students.

Speaker Change: <unk>.

Speaker Change: This is a question from Andrew Biscaglia with BNP. Please go ahead.

Speaker Change: Whereas a question from Andrew Buscaglia with BNP. Please go ahead.

Speaker Change: Okay.

Andrew Buscaglia: Good morning, Andrew.

Andrew Biscaglia: Good morning, Andrew.

Andrew Buscaglia: Yes.

Andrew Buscaglia: Sure.

Andrew Biscaglia: Mr. Pasquale is your phone muted

Robert Mehrabian: We've introduced Black Hornet 4, which is already getting traction. We also have some really nice programs in Space Development Agency, Trans-Tru, Tracker, Tracking Layer, as well as our international sales in that domain are healthy. So, in some ways... while C.R. would be, and a lot more, a pleasant thing to experience.

Andrew Buscaglia: Mr. Bruce Kelley is your phone muted.

Andrew Buscaglia: Hey, good morning, guys.

Andrew Biscaglia: Hey, good morning, guys.

Speaker Change: Hi. Sorry about that.

Bruce Kelley: Hi, sorry about that.

Speaker Change: Digital Imaging Margins. So I wanted to ask on

Bruce Kelley: Digital imaging.

Bruce Kelley: So.

Bruce Kelley: I wanted to ask on.

Speaker Change: you know so you're gonna start Q1 sounds like in a whole first off is digital imaging margins

Bruce Kelley: So you start Q1, it sounds like in a whole first off is digital imaging margins.

Robert Mehrabian: And you'd expect FLIR to expand margins again in 2024, correct? Just inherent in that margin commentary? Yes, we think FLIR will have some margin expansion, but if you look at it as a whole segment, That is our job. Thank you very much. Houston. Perfect.

Speaker Change: Do you expect those down year over year?

Do you expect those down year over year.

Bruce Kelley: And that effectively mark sort of a bottom.

Speaker Change: And that effectively marks sort of a bottom for that segment as sales start to improve from there.

Bruce Kelley: For that segment.

Bruce Kelley: Start to improve from there.

Speaker Change: No, the answer is no. I don't expect digital imaging margins to go down. I think they should go up a little bit in Q1 and then pick up the rest of the year. As I mentioned before, Andrew, we think digital imaging as a whole should have margin improvement in 24, somewhere between 50 basis points and 100 basis points.

Speaker Change: No. The answer is no I don't expect digital imaging margins to go down I think they should go up a little bit in Q1, and then pick up the rest of the year.

Robert Mehrabian: We've done it in the past. We've had CRs for many years. Right now, we're looking at what we have in our backlog, which is helpful.

Joseph Giordano: Thanks, Robert. Thank you. Next, we go to the line of Kristine Liwag representing Morgan Stanley. Please go ahead. Good morning, everyone. Good morning, Chris.

Speaker Change: As I mentioned before Andrew This we think digital imaging as a whole should have margin improvement.

Robert, last year you talked about some facility consolidation at digital imaging, and you're also talking about 80 basis points in margin expansion this year for the segment. How much of that is from this consolidation from before on the FLIR integration, and how much of that is on lower prices? And ultimately, could we expect to see higher margins there if you have additional cost takeout you could do this year? Yeah, Kristine, let me see if I can do this properly.

Robert Mehrabian: And then on the unmanned systems, air systems that you guys cited as being lower for DI, is that related to just... sunsetting programs, or what was driving that change? I think... basically, it's tough comps rather than real decline. I think, uh, we think our drone businesses are healthy. We also have some businesses that are anti-drone or drone detection, which we're selling in Europe, which are very healthy. So I think it's just a matter of tough competitions.

Speaker Change: 24, somewhere between 50 basis points and 100 basis points.

Speaker Change: We're probably more prejudiced towards the higher number, but nevertheless, no, I don't think we're expecting to suffer there, because as we've done before, when some of our markets soften up,

Speaker Change: We probably more prejudice towards the higher number, but nevertheless, no I don't think we are expecting to suffer because.

Speaker Change: As we've done before.

Speaker Change: Some of our markets soften up.

Speaker Change: We take costs

We take cost out and then.

Speaker Change: and then that helps maintain our margins and the markets come back we really enjoy

Speaker Change: That helps maintain our margins in the markets come back.

Robert Mehrabian: We are in the process, for example, now in terms of space consolidation. What we're doing is getting out of leased spaces and moving to owned spaces. For example, in Massachusetts, we have an owned space in Barrica.

Speaker Change: We really enjoy.

Speaker Change: The margin improvement so no I don't think digital imaging is going to go down.

Speaker Change: The margin improvement. So no, I don't think digital imaging is going to go down.

Speaker Change: You mean up year-over-year or up sequentially?

Speaker Change: And you mean up.

Speaker Change: Year over year or up sequentially.

Robert Mehrabian: We're getting out of a leased space there. That should be effective in March. That will help us save something of the order of $500,000, $600,000, $700,000. The issue that we have, while consolidation overall is helpful, it's the growth of our businesses and the lower cost that we have put in place this year that should be more helpful, so when Edwin thinks about or talks about margin improvement, he is looking at really a lower cost structure which we've achieved, maintaining that, and getting some growth, especially from our Thanks, great caller. And in terms of industrial automation and the laboratory instrumentation markets, you talked about a rebound for the second half of the year. What metrics are you looking at?

Speaker Change: Well, I think year over year first.

Joseph Giordano: Other than that, we feel very good about our drawing. Great, thank you so much. Thank you. We have a question from the line of Joe Girardo with TD Pollen. Please go ahead. Hey guys, we're close enough here. How are you doing?

Speaker Change: Well I think year over year first.

Speaker Change: It's going to go up between 50 to 100 basis points.

Speaker Change: Yeah, I'd say between 50 to 100 basis points.

Speaker Change: Thank you.

Speaker Change: I think okay.

Speaker Change: I think what will happen is if there's sequentially, it will be sequential improvement. I don't expect things to go down.

Speaker Change: Yes.

Speaker Change: No.

Speaker Change: I think what would happen is if there is if there is sequentially. It would be sequential improvement I don't expect things to go down.

Joseph Giordano: Good job. Good. Can I start on free cash flow? I think that, you know, at the end of the day, that probably came in a little lighter than you thought for the full year. Can you talk about how you think 24 shapes up and how working capital looks for the year? Yeah, you're right. It came in a little light.

Speaker Change: Yeah, okay.

Speaker Change: Yeah Okay.

Speaker Change: Okay and then.

Speaker Change: Okay, and then...

Speaker Change: In past quarters, you sort of broke out.

Speaker Change: In past quarters, you sort of broke out where book.

Speaker Change: Book to Bill vs. Legacy, Teledyne, Book to Bill, do you have that?

Speaker Change: Book to Bill versus legacy <unk> book to Bill do you have that and then.

Speaker Change: I'm wondering your view on potential incremental defense awards as the year progresses.

Speaker Change: I'm wondering.

Speaker Change: Your view on potential incremental <unk>.

Speaker Change: Ward.

Speaker Change: Progressing.

Speaker Change: Sure.

Robert Mehrabian: But we made some really good progress in the third quarter and especially in the fourth quarter, from our managed working capital perspective. We had some significant improvement in our efforts to reduce our inventory. The flip side is we also did not, you know, we're always, like most companies, suffering from not being able to get cash for our R&D. So I'd say that affected us maybe $75 or $60 to $75 million of S E I C H E U S K A S W U S F U S I F U S E S I S Our cash, nevertheless, if you looked at it, we paid down $680 million of debt. Steve Adubato, Paul McMurray, Jacques VanEus from Coolerton, Murray Ryan from Gittins, Alright, this is Sean Andrews speaking live at the Death Oaks Convention Center.

Speaker Change: If you look at instrumentation,

Speaker Change: If you look at instrumentation.

Speaker Change: Mentation.

Speaker Change: which is all legacy Teledyne in some way.

Speaker Change: Is all legacy Teledyne in some ways.

Speaker Change: which is marine environmental and test and measurement.

Which is marine environmental and test and measurement.

Speaker Change: The book to build in Q4 was

Speaker Change: The book to Bill in Q4 was.

112.

Speaker Change: 1.12.

Speaker Change: which is very healthy, driven primarily by marine, which which

Speaker Change: Which is very healthy driven primarily by marine.

Robert Mehrabian: What indicators are you following that you're watching out for for this end market? For industrial automation, really. It's a combination of We're seeing, for example, some improvement in the semi-market now, and projections for improved semi-market recovery. We'll also...

Speaker Change: <unk>.

Speaker Change: uh,

Speaker Change: was really good.

Speaker Change: Was really good.

Speaker Change: Digital Imaging

Speaker Change: Digital imaging.

Speaker Change: Yeah.

Speaker Change: We

Speaker Change: We.

Speaker Change: are excluding FLIR. I'm just answering your question precisely.

Speaker Change: Our excluding flair.

Speaker Change: Sitting here.

Speaker Change: Precisely.

Speaker Change: It was just over one.

Speaker Change: Aerospace and Defense was closer to 1.2, that's historical teledyne, and Engineer Systems was just over 1.

Speaker Change: Aerospace and defense was closer to one two.

Speaker Change: Historic of Teledyne and engineered systems was just over one.

Robert Mehrabian: We're seeing some pickup in smartphones now, which is our consumer-related business, which affects our microelectromechanical MEMS programs in the room. Other markets, especially laboratory instrumentation, we don't have as much visibility, frankly. We haven't seen these kinds of declines before, so we think those should come back, but we're not counting on them a lot. We think there's a flip side to our environmental businesses, which is a part of, which is air and air quality, and water quality monitoring, which have been very healthy.

Speaker Change: And then if you look at FLIR, which is our big acquisition, obviously, it's just over one.

And then if you look at clear, which is our big acquisition. Obviously it was just over one so.

Speaker Change: All in all whether it's.

Speaker Change: All in all, whether it's

Speaker Change: are historical Teledyne or Teledyne plus FLIR. If you look at Q4, our book to build was over 100,000.

Robert Mehrabian: Ladies and gentlemen, Jim Mussina from Columbus Near Gidons. Our debt-to-EBDA ratio is about 1.9. So, let me fast forward to 2024. We believe we'll do a little better in 2024 than we did in 2023. We'd like to think that we'd have a 100% conversion, recognizing that there is always going to be this R&D headwind. Even though everybody in Congress has agreed that the R&D programs should be passed,

Speaker Change: Our historical Teledyne Teledyne plus layer, if you look at Q4.

Speaker Change: Our book to Bill was overblown.

Speaker Change: Closer to 1.07.

Speaker Change: Closer to 1.2 of seven.

Speaker Change: okay and and then on the question on um you know your feeling on incremental defense awards throughout the years so is there still a lot you're tracking

Speaker Change: Okay, and then on the question on <unk>.

Youre feeling on incremental defense awards throughout the year, So there's still a lot you're tracking.

Speaker Change: Yes. The answer is yes. We have a pretty good

Speaker Change: Yes, the answer is yes.

Speaker Change: Pretty good.

Speaker Change: Read on what's coming we have some new products I've mentioned.

Speaker Change: Read on what's coming. We have some new products. I mentioned the

Speaker Change: Blackhorn is four.

Speaker Change: Black Hornets for.

Robert Mehrabian: We have a nice backlog, and we think the combination of those two will help us in that part of our instrumentation. Thank you. And last question for me. I mean, your current leverage position gives you the flexibility to pursue more sizable deals. You've recently closed the Xena acquisition, for example.

Speaker Change: I mentioned

Speaker Change: I've mentioned.

Speaker Change: Space towards true.

Speaker Change: Space Taunts Truth.

Robert Mehrabian: I think nothing's passing in this Congress, so we're assuming we don't get that. Nevertheless, we think we'll be somewhere between $900,000, $925,000, and $1 billion. If we hit those numbers..., which we think we will..., then our debt-to-EPTA ratio should go down from 1.9 to closer to 1.1 to 1.2, which puts us in a really good position to be able to attract both small and mid-sized actors. That's a really helpful caller.

Speaker Change: The primes that have gotten their awards in last week.

Mhm.

Speaker Change: <unk> that have gotten their awards in.

Speaker Change: Last week.

Speaker Change: We are a sub to all of you.

Speaker Change: It's up to all of them.

Speaker Change: and we feel good about that.

And we feel good about that.

Speaker Change: Yeah, Okay. Thanks, Robert.

Speaker Change: Okay. Thanks, Robert.

But in terms of larger deals, are valuations starting to look more attractive? And how is the 2024 pipeline shaping up? Yeah, I have to tell you, valuations on the larger deals have not come down yet as much as we would like. We've looked at some of them, and all of our competitors have paid for large ones; those are kind of out of our list, out of our range of what we would consider. On the flip side, we see some opportunities in smaller bolt-on acquisitions, what we call string of pearls, which are available, and we will be pursuing those. If you look at our 68, 69 acquisitions over our history, the string of pearls are about 60 out of 68, 69. They are the easiest to integrate.

Robert Mehrabian: For sure. Thank you.

For sure. Thank you.

Speaker Change: And we'll just give a quick follow up here. One followed by zero if you do have a question. One followed by zero. And let's go to the line of Noah Popanak with Goldman Sachs. Please go ahead.

Speaker Change: And we will just give a quick follow up here one followed by zero. If you do have a question one followed by zero and let's go to the line of Noah <unk> with Goldman Sachs. Please go ahead.

Noah Popanak: Hey, good morning, everyone.

Noah: Hey, good morning, everyone.

Noah Popanak: Good morning, Laura.

Noah: Good morning.

Noah: Robert you are.

Noah Popanak: Robert, your full-year 2024 framework is assuming 4% full-year organic revenue growth, is that correct?

Noah: Full year 2024 framework, there's assuming 4% full year organic revenue growth is that correct.

Robert Mehrabian: Yeah, about 4%.

About 4%.

Robert Mehrabian: And can you just repeat what you said about the first quarter top line revenue dollars or organic revenue growth?

Noah: And can you just repeat what you said about the first quarter topline revenue dollars organic revenue growth.

Robert Mehrabian: My last one, you know, we've kind of talked about DI a lot, but I just want to, Maybe if you could frame for the full year of 23. How much down was the industrial and scientific vision and what did that do to margins, and then how did FLIR margins for the full year look year on year? Okay. Let me just pick the first part, industrial and scientific visions. I'm going to say we're down about 2%, year over year, with larger declines in Q4. In terms of the margins... Flair's margins actually improved significantly year-over-year. It went from... 20.3 percent in 2022 to 22.1 percent in 2023, which was very healthy. As a consequence, we were able to hold the overall margins in digital imaging relatively flat.

Speaker Change: Yes, I think.

Robert Mehrabian: Yeah.

Robert Mehrabian: It'd be about 1.4 or a little under if that's going to be our lowest quarter and I'm saying that because of the short cycle businesses that we're seeing. We have orders on long cycle businesses, but we are short cycle businesses. We're assuming that we'll not recover much in Q1. So it should be flat year over year in terms of revenue.

Speaker Change: It would be about one four or a little under and thats going to be our lowest quarter and im saying that because of the short cycle businesses.

Speaker Change: We are seeing we have orders on long cycle businesses.

Speaker Change: But we are short cycle businesses, we're assuming that will not recover much in Q1, so it should be flat year over year in terms of revenue.

Robert Mehrabian: We can fit them in, and we can improve their margins as we go. The larger deals, we have to be a little more patient because right now, prices are still pretty high. Thank you very much for all the color, first-year students. This is a question from Andrew Biscaglia with BNP. Please go ahead. Good morning, Andrew. Mr. Pasquale, is your phone muted? Hey, good morning, guys.

Robert Mehrabian: and then pick up a few books.

Speaker Change: And then pick up got it.

Speaker Change: Got it Okay, just yeah, I wasn't clear, but I am.

Speaker Change: Got it. Okay. Just, yeah, I wasn't clear, but now I am.

Speaker Change: And I guess in those short cycle businesses, I mean, this is sort of an ask and discuss, but just have you actually seen concrete

Speaker Change: And I guess in those short cycle businesses. I mean, this is sort of been asked him discussed, but just have you actually seen concrete.

Speaker Change: Evidence of when that will pick up or I know, it's short cycle, but but orders for it to pick up or are you just kind of making an assumption based on everything you know about the business and then I guess, you'll also have easier compares.

Speaker Change: evidence of when that will pick up or I know it's short cycle but orders for it to pick up or are you just kind of making an assumption based on everything you know about the business and then I guess you'll also have easier compares.

Speaker Change: That's very good.

Speaker Change: That's that's very good.

Speaker Change: Thank you very much.

Speaker Change: <unk>.

Speaker Change: We look at our pipeline.

Speaker Change: and many more.

Speaker Change: <unk>.

Speaker Change: I don't necessarily say that we have better orders at this time. When we're talking to our customers, we're looking at that inventory level.

Hi. Sorry about that. Digital Imaging Margins.

Speaker Change: And I would necessarily say that we have bettered orders at this time.

So I wanted to ask on, you know, so you're gonna start Q1 sounds like a whole first off is digital imaging margins. Do you expect those down year over year? And that effectively marks sort of a bottom for that segment as sales start to improve from there? No, the answer is no.

Speaker Change: Talking to our customers we are looking at their inventory levels.

Kristine Liwag: And you'd expect FLIR to expand margins again in 24, correct? Is it just inherent in that margin commentary? Yes. Yes, we think FLIR could have some margin expansion, but if you look at it as a whole segment... That is our job. In the Digital Imaging Segment, we expect margins to increase somewhere between 50 and 100 basis points, and others. Thank you. Thank you. Perfect. Thanks, Robert. Thank you. Next, we go to the line of Kristine Liwag, representing Morgan Stanley. Please go ahead. Good morning, everyone. Good morning, Chris.

Speaker Change: they're sharing that with us.

Speaker Change: They're sharing that with us.

Speaker Change: We see that inventories are going down as a consequence we expect that we will start getting the orders

Speaker Change: We see that inventories are going down as a consequence, we expect that we will start getting the orders.

Speaker Change: Thank you.

Speaker Change: <unk>.

Speaker Change: A long cycle, of course, you understand that's much easier because we already have the orders and we feel good about that. So the other thing that we do on the short cycle is we look at the general trends that people are talking about in terms of what happened in the semi-industry in the past number of quarters and what's...

Speaker Change: The long cycle of course.

You understand that's much easier because we already have the orders and we feel good about that so yes.

Robert Mehrabian: I don't expect digital imaging margins to go down. I think they should go up a little bit in Q1 and then pick up the rest of the year. As I mentioned before, Andrew, we think digital imaging as a whole should have a margin improvement of 24, somewhere between 50 basis points and 100 basis points.

We do on the short cycle as we look at the general trends that people are talking about in terms of what happened in the semi industry.

Robert Mehrabian: Robert, last year you talked about some facility consolidation at digital imaging, and you're also talking about 80 basis points and margin expansion this year for the segment. How much of that is from this consolidation from before on the FLIR integration, and how much of that is on better price-cost? And ultimately, could we expect to see higher margins there if you have additional costs to take out you could do this year? Yeah, Kristine, let me see if I can do this properly.

Speaker Change: In the past.

Speaker Change: A number of quarters and.

Speaker Change: What.

Robert Mehrabian: We're probably more prejudiced towards the higher number, but nevertheless, no, I don't think we're expecting to suffer there, because, as we've done before, when some of our markets soften up, we take costs, and then that helps maintain our margins, and when the markets come back, we really enjoy the margin improvement. So no, I don't think digital imaging is going to go down. Do you mean up year-over-year or up sequentially? Well, I think year-over-year first.

Speaker Change: What.

Speaker Change: What's expected, what people are projecting.

Speaker Change: Expect that what people are projecting.

Speaker Change: We're thinking that environmental and test and measurement measurement.

Speaker Change: Yes.

Speaker Change: We're thinking that environmental and test and measurement.

Speaker Change: will eventually

Speaker Change: <unk> will eventually.

Speaker Change: pick up, but we also seen some pick up in MEMS already in flame infrared as well as our maritime businesses.

Speaker Change: Pick up but we're also seeing some pickup in Mems or Randy.

Speaker Change: In.

Speaker Change: They are in progress as well as our maritime businesses. So.

Speaker Change: That's what's encouraging we see some.

Speaker Change: That's what's encouraging.

Robert Mehrabian: We are in the process, for example, now in terms of space consolidation. What we're doing is we're getting out of leased spaces and moving to owned spaces. For example, in Massachusetts, we have an owned space in Barrica.

Speaker Change: Lowering of inventories for our customers, as well as some pickup in certain unique businesses.

Speaker Change: Lowering of inventories out for our customers.

Speaker Change: As well as some pickup in certain unique businesses of ours.

Speaker Change: Okay, that makes sense and is helpful. If I go to the 4% organic for the year and then I do what you said with the segment margins,

Speaker Change: Okay that makes sense and is helpful. If I go to the 4% organic for the year and then I.

Robert Mehrabian: It's going to go up between 50 to 100 basis points. Thank you. I think what will happen is if there is sequential improvement, it will be sequential improvement. I don't expect things to go down. Yeah, okay. Okay, and then... In the past quarters, you sort of broke out.

Speaker Change: Do what you said with the segment margins.

Robert Mehrabian: We're getting out of leased space there, and that should be effective in March. That will help us save something of the order of $500,000, $600,000, $700,000. The issue that we have, what consolidation overall is helpful in our businesses and the lower cost structure that we have put in place this year that should be more helpful. So when Edwin thinks about or talks about margin improvement, he is looking at really a lower cost structure which we've achieved, maintaining that, and getting some growth, especially from our longer cycle. So it's a combination of those, I would say, lower cost and Gaurav Dixit. Thanks, great color.

Speaker Change: I think most of the things between that and the EPS are pretty straight forward. I get something above your EPS guidance. Is it safe to assume that you've just embedded some degree of conservatism relative to the lack of visibility and short cycle in the EPS range?

Speaker Change: I think most of the things between that and the EPS are pretty straightforward.

Speaker Change: I get something above your EPS guidance.

Speaker Change: Is it safe to assume that you've just embedded some degree of conservatism relative to the lack of visibility on short cycle in the EPS range, yes.

Speaker Change: Yes, you said it better than I could. We're always a little conservative.

Speaker Change: Yes, you said it better than I could.

Speaker Change: Okay.

Speaker Change: We're always.

Robert Mehrabian: Book to Bill vs. Legacy, Teledyne, Book to Bill, do you have that? I'm wondering your view on potential incremental defense awards as the year progresses. Sure. If you look at the instrumentation, which is all legacy Teledyne in some way, which is marine environmental and test and measurement. The book to build in Q4 was 1.12, which is very healthy, driven primarily by marine, which uh, was really good. Digital Imaging; we are excluding FLIR.

Speaker Change: A little conservative.

Speaker Change: There is one other thing that I should mention.

Speaker Change: The other there is one other thing that I should mention when we look at our segment per se and we looked at we look at increases in segment margins.

Speaker Change: When we look at our segments, per se, and we look at increases,

Speaker Change: in Segment March.

Speaker Change: We have to be cognizant of the fact that the new management

Speaker Change: We have to be cognizant of the fact that the new management, which is Edwin and George.

Speaker Change: which is Edwin and George are now going to be their costs or their pay is going to reflect in the corporate.

Speaker Change: <unk> are now going to be their costs are there.

Speaker Change: Pay to pay is going to be reflected in the corporate.

Robert Mehrabian: And in terms of industrial automation in the laboratory instrumentation markets, you've talked about a rebound for the second half of the year. What metrics are you looking at? What indicators are you following that you're watching out for for this end market? For industrial automation really... It's a combination of them.

Speaker Change: Of course, yes.

Speaker Change: Horseman.

Speaker Change: and we're also seeing a little higher medical and insurance premiums. So corporate we expect would go up,

Speaker Change: And we are also seeing a little higher medico and.

Speaker Change: Insurance premiums so corporate we expect would go up.

Speaker Change: That's why, while the margins in the segment look much higher, the corporate margins, we're assuming, are going to be increasing above.

Speaker Change: That's why while the margins in this segment look much higher to corporate margins are weighted assuming are going to be increasing.

Robert Mehrabian: I'm just answering your question precisely. It was just over one. Aerospace and Defense was closer to 1.2, that's historical Teledyne, and Engineer Systems was just over 1. And then if you look at FLIR, which is our big acquisition, obviously, it's just over one. All in all, whether it's historical Teledyne or Teledyne plus FLIR.

Robert Mehrabian: We're seeing, for example, some improvement in the semi-market now, and projections for improved semi-market recovery. We'll also... We're seeing some pick-up in smartphones now, which is our consumer-related business, which affects our microelectromechanical, MEMS, programs. In the other markets, especially laboratory instrumentation, we don't have as much visibility, frankly. We haven't seen these kinds of declines before, so we think about those who come back, but we're not counting on them a lot. We think there's a flip side to our environmental businesses, which that's a part of, which is air and air quality, and water quality monitoring, which has been very healthy.

Speaker Change: 50 to 60 basis points.

Speaker Change: 50 to 60 base.

Speaker Change: Okay, that's helpful. Last one, some of your commentary makes it sound like the M&A pipeline is pretty full and pretty active and you're pretty optimistic about what you see. Other things you've said suggest there's a bid-ask spread and

Speaker Change: Okay.

Speaker Change: That's helpful last one.

Speaker Change: Some of your commentary makes it sound like the M&A pipeline is pretty full and pretty active and you're pretty optimistic about what you see other things you've said suggests there's a bid ask spread.

Speaker Change: Maybe it's a little tougher so just can you put a finer point on it in terms of how likely we are to see deals this year.

Speaker Change: Maybe it's a little tougher, so I guess, can you put a finer point on it in terms of how likely we are to see deals this year?

Robert Mehrabian: If you look at Q4, our book to build was over 100,000. Closer to 1.07, okay, and then on the question of, you know, your feelings on incremental defense awards throughout the years, so is there still a lot you're tracking? Yes. The answer is yes.

Speaker Change: Yes, let me just say that.

Speaker Change: Yeah, let me just say that

Speaker Change: Confusion may have risen because I was answering two questions at the same time. The first part was larger acquisitions because our leverage ratio is obviously going down, and it will go down faster this year.

Speaker Change: The confusion map reason because I.

Speaker Change: <unk> two questions at the same time.

Speaker Change: First part was larger acquisitions, because we our leverage ratio is obviously going down and they'll go down faster this year.

Speaker Change: The larger acquisitions right now that we look at are pretty expensive. People are paying

Speaker Change: The larger acquisitions right now that we look at are pretty expensive tubular pain.

Robert Mehrabian: We have a pretty good read on what's coming. We have some new products. I mentioned Blackhorn is four. I mentioned Space Taunts Truth. The primes that have gotten their awards in last week.

Speaker Change: prices that we are not going

Speaker Change: Our prices that we are not.

Speaker Change: Going to on.

Speaker Change: On the other hand, smaller acquisitions

Speaker Change: On the other hand smaller acquisitions.

Kristine Liwag: We have a nice backlog. We think the combination of those two will help us, you know, in that part of our instrumentation. Thank you.

Speaker Change: are available, and we expect to make some decisions.

Speaker Change: RFA level, and we expect to make some of this year. So I think we'd be patient for the largest larger ones like we always have been.

Speaker Change: So...

Speaker Change: I think we'd be patient for the largest ones, larger ones like we always have been, but we would make some smaller equities.

Robert Mehrabian: We are a sub to all of you, and we feel good about that. Okay. Thanks, Robert. For sure.

Kristine Liwag: I mean, your current leverage position gives you the flexibility to pursue more sizable deals. You've recently closed the Xena acquisition. But in terms of larger deals, are valuations starting to look more attractive? And how is the 2024 pipeline shaping up? Yeah, I have to tell you, evaluations on the larger... The climate deals have not come down yet as much as we would like.

Speaker Change: But we would make some smaller acquisitions. This year. So we have a reasonable product line.

Speaker Change: So we have a reasonable problem.

Speaker Change: Got it. Okay, great. Thanks a lot.

Speaker Change: Got it okay, great. Thanks, a lot.

Speaker Change: And thank you, Noah, for sending those

Thank you. And we'll just give a quick follow-up here. One followed by zero if you do have a question. One followed by zero.

Speaker Change: Thank you for sending dose.

Speaker Change: Uh,

Noah Popanak: issues that you wanted some answers to that was very helpful.

Speaker Change: Issues that you wanted some assets there that was very helpful. Okay, great to hear that.

And let's go to the line with Noah Popanak with Goldman Sachs. Please go ahead. Hey, good morning, everyone. Good morning, Laura.

Speaker Change: Okay, yeah, great to hear that. We're excited about that initiative, so glad to hear that it's helpful.

Speaker Change: We're excited about that initiative, so glad to hear that it is helpful.

Speaker Change: Very helpful. Thank you.

Speaker Change: Thank you.

Robert Mehrabian: We've looked at some of the prices that our competitors have paid for large ones, those are kind of out of our range of what we would consider. On the flip side, we see some opportunities in smaller bolt-on acquisitions, what we call single pearls, are available, and we will be pursuing those. 68-69 acquisitions in our history, the string of pearls is about 60 out of 68-69. They're the easiest to integrate.

Speaker Change: Next is a question from Robert Jameson with UBS. Please go ahead.

Speaker Change: Next question from Robert Jamieson with UBS. Please go ahead.

Robert, your full-year 2024 framework is assuming 4% full-year organic revenue growth, is that correct? Yeah, about 4%. And can you just repeat what you said about the first quarter top line revenue dollars or organic revenue growth? Yeah. It'd be about 1.4 or a little under if that's going to be our lowest quarter, and I'm saying that because of the short cycle businesses that we're seeing. We have orders for long cycle businesses, but we are short cycle businesses. We're assuming that we won't recover much in Q1. So it should be flat year over year in terms of revenue, and then we pick up a few books. Got it. Okay. Just, yeah, I wasn't clear, but now I am.

Speaker Change: Yeah.

Robert Jamieson: Good morning Charley.

Robert Mehrabian: Good morning, George.

Robert Mehrabian: Very helpful. Just one kind of smaller one on A&D electronics. You know, strong growth like expected for next year and another 80 to 90 basis points of margin expansion. Just curious how you're thinking about the growth split within commercial aerospace, you know, between, you know, new builds and then MRO. And then how should we think about the puts and takes on margin there? Maybe if like MRO is a little bit pressured next year.

Robert Mehrabian: Very helpful.

Robert Mehrabian: Just one kind of smaller one on A&D electronics.

Robert Mehrabian: Strong growth expected for next year, another 80 to 90 basis points of margin expansion just curious.

Robert Mehrabian: How youre thinking about the growth split within commercial aerospace.

Robert Mehrabian: Between.

Robert Mehrabian: New builds and then MRO and then how should we think about the puts and takes on margin. There maybe if like MRO is a little bit pressured next year.

Robert Mehrabian: Yes.

Robert Mehrabian: Um,

Robert Mehrabian: Okay.

Robert Mehrabian: Let's stay with aerospace first.

Robert Mehrabian: Let's let's stay with the aerospace first.

Robert Mehrabian: uh

Robert Mehrabian: A significant amount of our

Robert Mehrabian: We can fit them in, and we can improve their margins as we go. For larger deals, we have to be a little more patient, because right now, prices are still pretty high. Thank you very much for all the color, for. This is a question from Andrew Bascalia with BNP. Please go ahead. Good morning, Andrew. Mr. Pisculli, is your phone muted?

A significant amount of our.

Speaker Change: Thank you very much.

Robert Mehrabian: Revenue in aerospace is in the after market.

Speaker Change: because we have a very large embedded

Robert Mehrabian: And I guess in those short cycle businesses, I mean, this is sort of an ask and discuss, but just have you actually seen concrete evidence of when that will pick up, or, I know it's a short cycle, but orders for it to pick up, or are you just kind of making an assumption based on everything you know about the business? And then I guess you'll also have easier comparisons. That's very good. Thank you very much.

Robert Mehrabian: We have a very large embedded.

Uh huh.

Speaker Change: Thank you.

Robert Mehrabian: Base.

Speaker Change: Bates

Speaker Change: in aircraft of various kinds.

Robert Mehrabian: In aircraft of various kinds.

Speaker Change: So we think that is going to be very helpful for us. We also are obviously in

Robert Mehrabian: So we think that is going to be very helpful. For us. We also are.

Robert Mehrabian: Obviously in.

Speaker Change: 737. We have a product line that's

Robert Mehrabian: 737, we have a product line that so.

Speaker Change: going into that.

Robert Mehrabian: Boeing into that.

Robert Mehrabian: We look at our pipeline, and many more. But I don't necessarily say that we have better orders at this time. When we're talking to our customers, we're looking at the inventory level; they're sharing that with us. We see that inventories are going down, and as a consequence, we expect that we will start getting orders. Thank you. A long cycle, of course, you understand that's much easier because we already have the orders and we feel good about that. So the other thing that we do on the short cycle is we look at the general trends that people are talking about in terms of what happened in the semi-industry in the past number of quarters and what's... What's expected, what people are projecting. We're thinking that environmental and test and measurement measurement will eventually pick up, but we have also seen some pick up in MEMS already in flame infrared as well as our maritime businesses.

Speaker Change: and

Hey, good morning, guys. Sorry about that Digital Imaging Margin.

Robert Mehrabian: <unk>.

Speaker Change: We think that's going to help us regardless of the current issues with bolts and so on.

Robert Mehrabian: We think thats going to help us regardless of the current issues with boats and so on.

Robert Mehrabian: So I wanted to ask on, You know, so your start to Q1 sounds like you're in a hole. First off, digital imaging margin. You know, do you expect that to be down year over year? And that effectively marks sort of a bottom for that segment as they'll start to improve from there. No, the answer is no.

On the defense side.

Speaker Change: On the defense side,

We are seeing some.

Speaker Change: We are seeing some...

Robert Mehrabian: Good.

Speaker Change: Good program.

Robert Mehrabian: Programs.

Speaker Change: in Modernization, Stockpile, Replacement,

Robert Mehrabian: In modernization stockpile replacement.

Speaker Change: and we think those would be helpful to us.

Robert Mehrabian: And we think those would be helpful to us.

Speaker Change: and

Robert Mehrabian: And.

Speaker Change: Obviously, we believe it'd be a balance

Robert Mehrabian: Obviously, we believe it would be a balance.

Speaker Change: and many more.

Robert Mehrabian: Improvement 14 aerospace.

Speaker Change: and in defense

Robert Mehrabian: In defence, perhaps 5% to 6%, 5% to 6% Danish domain.

Speaker Change: perhaps 5% to 6%, 5% to 6% in each domain.

Speaker Change: Great. Thank you very much for that.

Speaker Change: That's great. Thank you very much for that. And then this is kind of a more of a random question. But just, you know, we talked a little bit about capital allocation, you got a full funnel, probably going to look to do some smaller acquisitions. You know, absent anything large, I know, this would be a deviation for what we've seen over the last, you know, several years, but would you have any interest in, you know, buying back stock? And then I guess, you know, one other kind of thought or questions that random would be, given like the float, would you ever consider a stock split to maybe make it a little bit easier to trade, like, you know, tighten the bid-ask spread? And could that ever, you know, maybe make it easier for you to buy back stock? Thank you.

Speaker Change: And then just as kind of a more of a random question, but just.

Speaker Change: We talked a little bit about capital allocation, you've got a full funnel probably going to look to do some smaller acquisitions.

Robert Mehrabian: Because, you know, as we've done before, when some of our markets soften up, we take costs... and then that helps maintain our margins, and the markets come back. We really enjoy the margin improvement. So no, I don't think digital imaging is going to go there.

Speaker Change: Absent anything large and I know this would be a deviation from what we've seen over the last several years, but would you have any interest in buying back stock and then I guess, one other kind of thought or question is bit random would be.

Robert Mehrabian: That's what's encouraging. Lowering of inventories for our customers, as well as some pickup in certain unique businesses. Okay, that makes sense and is helpful. If I go to the 4% organic for the year and then I do what you said with the segment margins, I think most of the things between that and the EPS are pretty straight forward.

Speaker Change: Just given like the float would you ever consider a stock split to maybe make it a little bit easier to trade like tightened the bid ask spread and could that ever maybe make it easier for you to buy back stock. Thank you.

Robert Mehrabian: And do you mean up year over year or up sequentially? Well, I think year-over-year first. It's going off between 50 to 100 basis points. I think what will happen is if there's sequentially, it will be sequential improvement. I don't expect things to go down. Yeah, okay. Okay, and then, um... In the past quarters, you sort of broke out, we're... Book-to-Bill versus Legacy, Teledyne, Book-to-Bill, do you have that? Wondering your view on potential incremental defensive awards as the year progresses. Sure. If you look at the instrumentation, which is all legacy Teledyne in some way, which is Marine Environmental and Test and Measure. The book to build in Q4 was... 1.12, which is very healthy, driven primarily by marine, was really good, and Digital Imaging. We are excluding FLIR.

Speaker Change: Thank you.

Speaker Change: No, and the reason I, let me start there, and the reason I say that

Speaker Change: Split no and the reason I, let me start there then the reason I say that.

Speaker Change: That's a pain for our investors, and 90-plus percent of our investors are institutional investors, and we don't want to cause that kind of a problem for them. We have a very small fraction of our investors that are retailers.

It's a pain for our investors and 90 plus percent of already invested.

Speaker Change: First is our institutional investors and we don't want to.

I get something above your EPS guidance. Is it safe to assume that you've just embedded some degree of conservatism relative to the lack of visibility and short cycle in the EPS range? Yes, you said it better than I could. We're always a little conservative.

Speaker Change: Cause that kind of a problem for them, we have very small fraction of our investors that our retail investors going back to buyback.

Speaker Change: Going back to buybacks.

Speaker Change: Right now,

Speaker Change: Right now.

Speaker Change: We think

Speaker Change: We think.

Speaker Change: Our investment returns are much better reflected in acquisition.

Speaker Change: Our investment returns are much better reflected in acquisitions and stock buyback.

Robert Mehrabian: There is one other thing that I should mention. When we look at our segments, per se, and we look at increases in Segment March. We have to be cognizant of the fact that the new management, which is Edwin and George, is now going to be their costs, or their pay is going to reflect in the corporate. Of course, yes, and we're also seeing a little higher medical and insurance premiums. So corporate, we expect it would go up. That's why, while the margins in the segment look much higher, the corporate margins, we're assuming, are going to be increasing above. 50 to 60 base.

Speaker Change: and Dan Stockbein.

Speaker Change: You don't want to say never.

Speaker Change: uh, because, uh,

Speaker Change: Because.

Speaker Change: This talk goes on a lot, then it becomes attractive. I'm hoping that doesn't happen.

Speaker Change: Stock goes down a lot then it becomes attractive I'm, hoping that doesn't happen.

Speaker Change: We do have open authorization if we wanted to do that. Right now, I don't see that as long as we have...

Speaker Change: We do have open authorization, if we wanted to do that right now I don't see that as long as we have.

Speaker Change: attractive acquisitions, even small ones.

Speaker Change: Attractive acquisitions, even small ones.

Speaker Change: we'll do those and you know there's nothing wrong also having some cash on the side

Speaker Change: We'll do those.

Speaker Change: Theres nothing drawn grosso hiring some cash on the side in these days.

Speaker Change: in these days.

Speaker Change: With the interest rates that we're seeing so we have to pay down about $600 million.

Speaker Change: with the interest rates that we're seeing.

Speaker Change: So we have to pay down about $600 million of debt this year.

Speaker Change: Debt this year.

Robert Mehrabian: I'm just answering your question precisely. It was just over one. Aerospace and Defense, it was closer to 1.2, that's historical Teledyne, and Engineered Systems was just over 1. And then if you look at FLIR, which is our big acquisition, obviously, it's just over one. All in all, whether it's our historical Teledyne or Teledyne plus FLIR, if you look at Q4, our book to build was over, closer to 1.07. Okay, and then the question on your feelings on incremental defense awards throughout the years, though, there's still a lot you're tracking. Yes, the answer is yes, we have a pretty good... read on what's coming. We have some new products. I mentioned, by coordinates four. I mentioned... The primes that got their awards in last week's, We are a sub to all, and we feel good about that.

Speaker Change: In some ways, it's an unfortunate because its fixed debt at less than 1%.

Speaker Change: In some ways, it's unfortunate because it's fixed data of less than 1%.

Speaker Change: But then we don't have to pay down debt until 2026.

But then we don't have to pay down debt until 2026.

Okay, that's helpful. Last one, some of your commentary makes it sound like the M&A pipeline is pretty full and pretty active, and you're pretty optimistic about what you see. Other things you've said suggest there's a bid-ask spread and maybe it's a little tougher, so I guess, can you put a finer point on it in terms of how likely we are to see deals this year? Yeah, let me just say that confusion may have increased because I was answering two questions at the same time. The first part was larger acquisitions because our leverage ratio is obviously going down, and it will go down faster this year. The larger acquisitions right now that we look at are pretty expensive. People are paying prices that we are not going to. On the other hand, smaller acquisitions are available, and we expect to make some decisions. So...

Speaker Change: So we'll have a lot of cash available.

Speaker Change: <unk>.

Speaker Change: to do things.

Speaker Change: Two things.

Speaker Change: So.

Speaker Change: So,

Speaker Change: We think we'll be okay.

Speaker Change: We think we'll be OK.

Speaker Change: Great. Thank you very much for taking my questions.

Speaker Change: Of course.

Speaker Change: of course.

Speaker Change: As a final reminder, please press 1-0 for questions, and we have a follow-up from Joe Giordano. I'm so sorry if I pronounced your name wrong, and he's representing TD Pollen. Please go ahead.

Speaker Change: As a final reminder, please press one zero for questions and we have a follow up from Joe Giordano.

Joseph Giordano: <unk> I'm, sorry, sorry, if I pronounce your name wrong and we will go to he is representing TD pollen. Please go ahead.

Joseph Giordano: Hi, Joe. Hey, thanks for the quick – hey, thanks for the follow-up here. Just wanted to ask on the pricing environment because I know –

Joseph Giordano: Hi, Joe Hey, Thanks, Mike Hey, Thanks for the follow up here just wanted to ask on the pricing environment, because I know.

Joseph Giordano: Yes.

Joseph Giordano: You said before that maybe you took less price. I mean, price was so strong for kind of everyone for a long time here. But I think in some areas, maybe in some of the vision products, you took less price than you probably could have to kind of maintain share. And just curious how the pricing environment has evolved since you made those comments and what you're thinking and how price is a part of your guidance for next year.

Joseph Giordano: You said before that maybe you took less price price was so strong for kind of everyone for a long time here, but I think in some areas maybe in some of the vision products you took less priced and you probably could have to kind of maintain share and just curious how the pricing environment has evolved since you made those comments and what youre thinking.

Joseph Giordano: How price is.

Joseph Giordano: Is it part of your guidance for next year.

Joseph Giordano: Uh,

Joseph Giordano: First going backwards, in 23,

Joseph Giordano: First point backward.

Joseph Giordano: In 'twenty three.

Robert Mehrabian: I think we'd be patient for the largest ones, larger ones like we always have been, but we would make some smaller equity. So we have a reasonable problem. Got it. Okay, great. Thanks a lot.

Joseph Giordano: We had some nice price increases.

Joseph Giordano: We had some nice.

Joseph Giordano: Price increases.

Speaker Change: I'm going to say

Joseph Giordano: I'm going to say.

Joseph Giordano: Broadly, 2%, 3%, let's say, 3% we expect the same in 'twenty four.

Speaker Change: broadly two to three percent let's say three percent we expect the same in 24.

Robert Mehrabian: Okay. Thanks, Robert, for sure. Thank you. And we'll just give a quick follow-up here, one followed by zero, if you do have a question. One followed by zero, and we'll go to the line of Noah Papanach with Goldman Sachs. Please go ahead. Hey, good morning everyone. Good morning, Lua.

And thank you, Noah, for sending those Uh, issues that you wanted some answers to. It was very helpful. Okay, yeah, great to hear that. We're excited about that initiative, so glad to hear that it's helpful. Very helpful.

Speaker Change: In some areas, obviously, we were able to increase price more than 3%.

In some areas, obviously, we were able to increase price more than 3%.

Speaker Change: Thank you.

Joseph Giordano: <unk>.

Speaker Change: but in some areas like government contracts that are

Joseph Giordano: But in some areas like.

Joseph Giordano: Government contracts that are.

Speaker Change: Not Pichelli, I said that they're...

Joseph Giordano: Not peak sizes.

Thank you. Thank you. Next is a question from Robert Jameson with UBS. Please go ahead. Good morning, George. Very helpful. Just one kind of smaller one on A&D electronics.

Joseph Giordano: Cost plus that you cannot increase prices as such so I think 2% to 3% is what we're looking at 424.

Speaker Change: Klaus Klotz

Robert, your full-year 2024 framework is assuming 4% full-year organic revenue growth. Is that correct? Yeah, about 4%. And can you just repeat what you said about the first quarter top line revenue dollars or organic revenue growth? Yeah, I think it'd be about 1.4 or a little under.

Speaker Change: There you can't increase prices as such.

Speaker Change: So I think 2 to 3% is what we're looking at for 2014.

Speaker Change: Great. Thank you.

Speaker Change: For sure.

Robert Mehrabian: You know, strong growth like expected for next year and another 80 to 90 basis points of margin expansion. Just curious how you're thinking about the growth split within commercial aerospace between, you know, new builds and then MRO. And then how should we think about the puts and takes on margin there? Maybe if, like MRO, it is a little bit pressured next year. Um, Let's stay with aerospace first, uh A significant amount of our, Thank you very much, because we have a very large embedded Thank you. Bates, in aircraft of various kinds.

Speaker Change: For sure.

Speaker Change: And we have no other participants queuing up at this time.

Speaker Change: Thank you very much, Tom. I'll just have, I'll ask Jason to please conclude our call. Thanks, Robert. And again, thanks everyone for joining us this morning. And if you have follow-up questions, please feel free to call me at the number on the earnings release. And Tom, if you could give the replay information just at the conclusion, that would be great.

Speaker Change: Thank you very much Tom I'll just have.

Robert Mehrabian: That's going to be our lowest-margin quarter. And I'm saying that because of the short-cycle businesses that we're seeing. We have orders for long-cycle businesses. But for our short-cycle businesses, we're assuming that we won't recover much in Q1. So it should be flat year over year in terms of revenue. And then Peacock Dollar Report. Got it. Okay. Just, yeah, I wasn't clear, but now I am. Um, and I guess in those short cycle businesses, I mean, this is sort of an ass in disgust, but just have you actually seen concrete?

Speaker Change: I'll ask Jason to please conclude the call.

Jason: Thanks, Robert and again, thanks, everyone for joining us this morning and follow up questions. Please feel free to call me at the number on the earnings release and Tom If you could give the replay information just a conclusion that would be.

Tom: Thanks, everyone, Yes, one moment here on hold that up.

Jason VanWees: Oh, yes.

Jason VanWees: One moment here, I'll pull that up.

Tom: Sorry about that ladies.

Jason VanWees: Sorry about that. Ladies and gentlemen, this will be available for replay if you give me one moment.

Tom: Ladies and gentlemen.

Tom: We'll be available for replay if you give me one moment.

Jason VanWees: It'll be available for replay in an hour and it'll run through February 24th at midnight. You may access the AT&T replay service at any time.

Tom: It will be available for replay in an hour and it will run through.

Robert Mehrabian: So we think that is going to be very helpful for us. We are also, obviously, in 737. We have a product line that's going into that, and we think that's going to help us regardless of the current issues with bolts and so on. On the defense side, we are seeing some... good programs, in Modernization, Stockpile, Replacement, and we think those would be helpful to us, and Obviously, we believe it'd be a balance, and many more, and in defense, perhaps 5% to 6%, 5% to That's great. Thank you very much for that. And then This is kind of more of a random question.

February 24th at Midnight, you may access the AT&T.

Robert Mehrabian: evidence of when that will pick up, or I know it's a short cycle, but orders for it to pick up, or are you just kind of making an assumption based on everything you know about the business, and then I guess you'll also have easier comparisons. Oh that's very good. We look at our pipeline. I can't necessarily say that we have better orders at this time, but we're talking to our customers, and we're looking at that inventory level. They're sharing that with us. We see that inventories are going down, and as a consequence, we expect, we will start getting the orders. The long cycle, of course, you understand, that's much easier because we already have the orders, and we feel good about that.

Tom: Replay service at any time by.

Jason VanWees: by dialing 866-207-1041, 866-207.

Tom: By Dialling 806 2071041866207.

Jason VanWees: 1041 and

Tom: 1041.

Jason VanWees: Entering the access code of 4590647, 4590647.

Entering the access code of 45906474590647 and.

Speaker Change: We thank you for your participation in using the AT&T event services. You may now disconnect.

We thank you for your participation and using the AT&T event services you may now disconnect.

Robert Mehrabian: So the other thing that we do on the short cycle is we look at the general trends that people are talking about in terms of what happened in the semi-industry in the past, what's expected, and what people are projecting. We've been thinking that environmental and test and measurement will pick up, but we've also seen some pick up in MEMS already, in FLIR, Infrared, as well as our maritime businesses.

Robert Mehrabian: But just, you know, we talked a little bit about capital allocation; you got a full funnel, and you're probably going to look to do some smaller acquisitions. You know, absent anything large, this would be a deviation from what we've seen over the last, you know, several years, but would you have any interest in, you know, buying back stock? And then I guess, you know, one other kind of thought or question that's kind of random would be, given the float, would you ever consider a stock split to maybe make it a little bit easier to trade, like, you know, tighten the bid-ask spread?

Robert Mehrabian: That's what's encouraging; we see some... lowering of inventories for our customers as well as some pickup in certain unique businesses. Okay, that makes sense and it's helpful. If I go to the 4% organic for the year and then I do what you said with the segment margins, I think most of the things between that and the EPS are pretty straightforward.

Robert Mehrabian: And could that ever, you know, maybe make it easier for you to buy back stock? Thank you. Thank you. No, and the reason I, let me start there, and the reason I say that, That's a pain for our investors, and 90-plus percent of our investors are institutional investors, and we don't want to cause that kind of a problem for them. We have a very small fraction of our investors that are retailers.

Robert Mehrabian: I get something above your EPS guidance. Is it safe to assume that you've just embedded some degree of conservatism relative to the lack of visibility and short cycle in the EPS range? Yes, you said it better than I could. We're always a little conservative.

Robert Mehrabian: Going back to buybacks. Right now, we think our investment returns are much better reflected in acquisitions and Dan Stockbein. You don't want to say never, uh, because, uh, This talk goes on a lot, then it becomes attractive. I'm hoping that doesn't happen.

Robert Mehrabian: There's one other thing that I should mention. When we look at our segment... per se, and we look at it, we look at increased... and Segment Mark. We have to be cognizant of the fact that the new management..., which is Edwin and George, are now going to be their costs or their pay is going to reflect in the corporate, and, of course............ And we're also seeing a little higher medical and insurance premiums. So corporate, we expect, would go up. That's why, while the margins in the segment look much higher, the corporate margins... are, we're assuming are going to be increasing above the 50 to 60 base.

Robert Mehrabian: We do have open authorization if we want to do that. Right now, I don't see that as long as we have attractive acquisitions, even small ones, we'll do those, and you know there's nothing wrong also having some cash on the side these days, with the interest rates that we're seeing. So we have to pay down about $600 million of debt this year. In some ways, it's unfortunate because it's fixed data at less than 1%. But then we won't have to pay down debt until 2026.

Robert Mehrabian: Okay, that's helpful. Last one. Some of your commentary makes it sound like the M&A pipeline is pretty full and pretty active, and you're pretty optimistic about what you see. Other things you've said suggest there's a bid-ask spread, and... Maybe it's a little tougher. So I guess, can you put a finer point on it in terms of how likely we are to see deals this year? Yeah, let me just say that, uh...

Robert Mehrabian: So we'll have a lot of cash available to do things. So, we think we'll be OK. Great. Thank you very much for taking my questions, of course. As a final reminder, please press 1-0 for questions, and we have a follow-up from Joe Giordano. I'm so sorry if I pronounced your name wrong, and he's representing TD Pollen. Please go ahead. Hi, Joe.

Robert Mehrabian: The confusion may have been caused because I was answering two questions at the same time. The first part was larger acquisitions because our leverage ratio is obviously going down, and it will go down faster this year. The larger acquisitions right now that we look at are pretty expensive; people are paying for them. On the other hand, smaller acquisitions... are available, and we expect to make some. I think we'll be patient for the larger ones like we always have been, but we will organize some smaller activities.

Joseph Giordano: Hey, thanks for the quick – hey, thanks for the follow-up here. Just wanted to ask about the pricing environment because I know you said before that maybe you took a lower price. I mean, price was so strong for kind of everyone for a long time here.

Robert Mehrabian: But I think in some areas, maybe in some of the vision products, you took less price than you probably could have to kind of maintain share. And I'd be curious how the pricing environment has evolved since you made those comments and what you're thinking and how price is a part of your guidance for next year. Uh, first going backwards, in 23, we had some nice price increases. I'm going to say, broadly two to three percent, let's say three percent. We expect the same in 24. In some areas, obviously, we were able to increase prices more than 3%. Thank you, but in some areas, like government contracts that are, Not Pichelli, I said that they're... Klaus Klotz, you can't increase prices as such. So I think 2 to 3% is what we're looking at for 2014.

Robert Mehrabian: So we have a reasonable. Got it. Okay, great. Thanks a lot.

I thank you, Noah, for sending those issues that you wanted some answers to. That was very helpful. Okay, yeah, great to hear that. We're excited about that initiative, so glad to hear that it's helpful. Very helpful.

Robert Mehrabian: Thank you. Thank you. Next is a question from Robert Jameson with UBS. Please go ahead. Good morning. Very helpful. Just one kind of smaller one on A&D Electronics.

Joseph Giordano: Great. Thank you. For sure.

Robert Mehrabian: You know, strong growth like expected for next year and another 80 to 90 basis points of margin expansion. Just curious how you're thinking about the growth split within commercial aerospace, you know, between, you know, new builds and then MRO, and then how should we think about the puts and takes on margin there, maybe if MRO is a little bit pressured next year. Uh, Let's stay with aerospace first. A significant amount of our revenue in aerospace is in the aftermarket because we have a very large embedded. Bay, in aircraft of various kinds.

Joseph Giordano: And we have no other participants queuing up at this time. Thank you very much, Tom. I'll just have, I'll ask Jason to please conclude our call. Thanks, Robert.

And again, thanks everyone for joining us this morning. And if you have follow-up questions, please feel free to call me at the number on the earnings release. And Tom, if you could give the replay information just at the conclusion, that would be great. Oh, yes.

Operator: One moment here, and I'll pull that up. Sorry about that. Ladies and gentlemen, this will be available for replay if you give me one moment. It'll be available for replay for an hour, and it'll run through February 24th at midnight. You may access the AT&T replay service at any time by dialing 866-207-1041, 866-207-1041 and entering the access code of 4590647, 4590647. We thank you for your participation in using the AT&T event services. You may now disconnect.

Robert Mehrabian: So, we think that is going to be very helpful for us. We also are, obviously, in... 737. We have a product line that's going into that, and we think that's going to help us, regardless of the current issues with Bolton on the defense side. We are seeing some.

Robert Mehrabian: Good programs, in modernization, stockpile, replacement, and we think those would be helpful to us, and, Obviously, we believe it'd be a balance, improvement, both in aerospace and in defense, perhaps 5 to 6 percent, 5 percent to 6 percent in each domain. That's great, thank you very much for that. And then this is kind of a more of a random question, but just, you know, we talked a little bit about capital allocation, you got a full funnel, probably going to look to do some smaller acquisitions. You know, after anything large, and I know this would be a deviation from what we've seen over the last, you know, several years, but would you have any interest in, you know, buying back stock? And then I guess, you know, one other kind of thought or question that is a bit random would be, given the float, would you ever consider a stock split to maybe make it a little bit easier to trade, like, you know, tighten the bid-ask spread?

Robert Mehrabian: And could that ever, you know, maybe make it easier for you to buy back stock? Thank you. Thank you. No. And the reason I... Let me start there.

Robert Mehrabian: And the reason I say that... That's a pain for our investors, and 90 plus percent of our investors are institutional investors, and we don't want to cause that kind of a problem for them. We have a very small fraction of our investors that are retailers going back to buy back right now. We think our investment returns are much better reflected in acquisitions and Stock5. You don't want to say never. Because this talk goes on a lot, then it becomes attractive. I'm hoping that doesn't happen.

Robert Mehrabian: We do have open authorization if we want to do that, but right now, I don't see that as long as we have it. Attractive acquisitions, even small ones, will do those, and you know there's nothing wrong also having some cash on the side these days, with the interest rates that we're seeing. So we have to pay down about $600 million of debt this year. In some ways, it's unfortunate because it's fixed data of less than 1%.

Robert Mehrabian: But then we don't have to pay down debt until 2026, so we have a lot of cash available. So, we think we'll be okay. Great, thank you very much for taking my question. As a final reminder, please press 1-0 for questions, and we have a follow-up from Joe Giordano. I'm so sorry if I pronounced your name wrong, and we'll go to, he's representing TD Pollen. Please go ahead. Hi Joe.

Joseph Giordano: Hey, thanks for the quick response. Hey, thanks for the follow-up here. Just wanted to ask about the pricing environment, because I know he said before that maybe you took a lower price, I mean price was so strong for kind of everyone for a long time here, but I think in some areas, maybe in some of the Vision products, you took a lower price than you probably could have to kind of maintain share. And just curious how the pricing environment has evolved since you made those comments and what you're thinking and how price is a I'm going to say, broadly 2 to 3 percent. Let's say 3 percent. We expect the same in 24. In some areas, obviously, we were able to increase prices more than 3%, but in some areas, like government contracts that are... Cost Plus, there you can't increase prices as such. So I think 2% to 3% is what we're looking at for 2024.

Robert Mehrabian: Great, thank you, for sure. And we have no other participants queuing up at this time. Thank you very much, Tom. I'll just have, I'll ask Jason to please conclude our call. Thanks Robert and again, thanks everyone for joining us this morning, and if you have follow-up questions, please feel free to call me at the number on the earnings release. Tom, if you could give the replay information just at the conclusion, that would be great. Thanks everyone. One moment here; I have to pull that up.

Jason VanWees: Sorry about that. Ladies and gentlemen, this will be available for replay if you give me one moment. It will be available for replay in an hour, and it will run through February 24th at midnight. You may access the AT&T replay service at any time by dialing 866-207-1041. 1041 and, entering the access code of 4590647, and we thank you for your participation in using the AT&T event services. You may now disconnect.

Q4 2023 Teledyne Technologies Inc Earnings Call

Request a DemoDemo

TDY

Teledyne Technologies

Earnings