Q4 2024 Teledyne Technologies Inc Earnings Call
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Speaker Change: Welcome to Teledyne's fourth quarter earnings release conference call, Here's our first speaker, Mr. Jason bandwidth.
Speaker Change: Good morning, everyone. This is Jason <unk>, Vice Chairman I'd like to welcome everyone to Teledyne's fourth quarter and full year of 2024 earnings release Conference call, We released our earnings.
Speaker Change: Okay.
Speaker Change: Joining me today are teledyne's executive Chairman, Robert Mehrabian, CEO, Edwin rocks, President and COO, George Bob <unk>, Senior Vice President and CFO, Steve Black White, and Melanie today, EVP General Counsel, Chief compliance Officer and Secretary after remarks by Robert It went GA, Steve will last.
Speaker Change: Your question of course, though before we get started our attorneys have reminded me to tell you that all forward looking statements made this morning are subject to various assumptions risks Green coffee, yes as noted in the earnings release, and our periodic SEC filings and of course actual results may differ materially.
Speaker Change: In order to avoid potential selective disclosures. This call is simultaneously being webcast and a replay both via webcast and Ireland.
Speaker Change: Oh for approximately one month.
Robert: Here is Robert.
Robert: Thank you, Jason and good morning, everyone and thank you for a journey into our earnings call.
In the fourth quarter, we achieved many all time Records records sales increased five 4% and accelerated from the third quarter.
Robert: Fourth quarter and full year non-GAAP earnings per share were drinker.
Robert: Ads, where fourth quarter and full year non-GAAP operating margin.
Robert: Finally, our record annual free cash flow.
Robert: Given that we ended the year with a very normal AD rates, despite $1.1 billion of capital deployment in piece go to college men 20 book.
Robert: We successfully closed the meter pack acquisition at the beginning of fiscal 2025.
Robert: And we continue to expect the completion of the XLR cause carve out transaction in the first quarter.
Robert: We entered 2025 optimistic about that business for you in both commercial and defense markets.
Robert: Our short cycle commercial businesses improved throughout 2024 and comparison ease.
Robert: In 2025.
Robert: I also believe our defense businesses.
Robert: Which favored purchase or theirs versus probe protracted appropriations.
Robert: Men versus manned platforms and standard products versus highly customers customized solution.
Robert: Our well positioned in the current environment.
Robert: Nevertheless.
Robert: Especially given the very strong U S. Dollar, we believe it's prudent to be a bit cautious in our 2025 outlook.
Robert: Including the acquisition of <unk>.
Robert: <unk> Pak.
Robert: But excluding the excel at a carve out.
Robert: This acquisition has not yet closed we believe 2025 cells may grow approximately 4% with non-GAAP earnings doubled that amount at approximately 8%.
Robert: The center of our outlook.
Robert: Range.
Robert: I will now turn the call over to Edwin.
Speaker Change: Very good comment on the performance of our digital imaging segment.
Edwin: Thank you audacious ethane and I will first report on the digital imaging sector, which represents approximately 54% of stabilized portfolio.
Speaker Change: Fourth quarter of 'twenty 'twenty four sales were a record and increased two 5% compared to last year.
Speaker Change: The performance of digital imaging last year inflected to Echo shale should stabilize I tell I fear with healthy growth across commercial and defense infrared imaging systems a magic.
Speaker Change: Air systems, as well as maritime hardware and software.
Speaker Change: While sales to industrial machine vision markets the clients year over year quarterly sales were at the highest level in 2024.
Speaker Change: Our legacy space based imaging business continued to grow.
Speaker Change: Well somehow healthcare businesses, such as cancer radiotherapy.
Speaker Change: Joseph X-ray detectors for more consumer discretionary dental market declines year over year.
Speaker Change: non-GAAP operating margins improved sequentially and year over year, primarily due to the contribution from clear, which more than offset the year over year decline in our higher contribution margin machine fishing sales.
Speaker Change: George will now report on the other three segments, which can present the balance of our teladoc.
George: Thanks Edwin the.
Speaker Change: The instrumentation segment consists of our marine environmental and test and measurement businesses, which contributed a little under 25%.
Speaker Change: For the total segment overall fourth quarter sales increased 10, 1% versus last year with growth in each major product line sales.
Speaker Change: Sales of Marine instruments increased 21, 1% in the quarter due to both strong offshore energy and subsea defense sales.
Sales of environmental instruments increased one 7%, primarily due to greater sales of laboratory instrumentation as well as air safety instruments.
Sales of electronic test and measurement systems, which include a sale of scopes protocol analyzers and Ethernet traffic generators sequentially improved for the third consecutive quarter and increased two 3% year over year.
Speaker Change: Instrumentation operating margin in the fourth quarter increased 27 basis points to 27, 3% and 96 basis points on a non-GAAP basis to a record of 29, 1%.
Speaker Change: In the aerospace and defense Electronics segment, which represents roughly 14% of Teledyne sales fourth quarter sales increased six 8% driven by growth of defense electronics products.
Speaker Change: Overall segment operating profit increased year over year, with GAAP and non-GAAP segment margin, increasing over 150 basis points.
Speaker Change: For the engineered system segment, which contributes approximately 8% to overall sales fourth quarter revenue increased 11%. However segment operating profit decreased due to higher cost to complete estimates on certain programs.
Robert: I will now pass the call back to Robert.
Robert: Thank you George.
Robert: Conclude with a few comments on capital allocation.
Speaker Change: In 2020 floor, we continued our tradition of prudent and flexible capital deployment that is.
Speaker Change: We opportunistically repurchased stock when we felt our shares were very undervalued.
Speaker Change: While at the same time, we were willing to for one large acquisition.
It's all price expectation or unreasonable.
Speaker Change: But then I started on valuation partially recovered and M&A markets became more rational.
Speaker Change: We pivoted by stopping repurchases and we're pleased to announce the micro pack and extended jaws acquisition.
Speaker Change: Given over $1.1 billion of free cash flow in 2024.
Speaker Change: Our balance sheet capacity is the highest in years and our M&A pipeline remains healthy.
Speaker Change: Nevertheless, we will continue to exercise discipline and flexibility.
Speaker Change: We have always done.
Speaker Change: I will now turn the call over to Steve Blackwood.
Steve Blackwood: 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 2025 outlook.
Steve Blackwood: Again, our fourth quarter non-GAAP earnings per share reflect the removal of $16 $6 billion of FLIR acquisition related tax benefits.
Steve Blackwood: Remaining tax benefits up $13 $6 billion were approximately half offset by a higher tax rate.
Steve Blackwood: In the fourth quarter cash flow from operating activities was $332 $4 million compared with $164.
Steve Blackwood: $4 million in 2023.
Steve Blackwood: Cash flow that is.
Steve Blackwood: That is cash flow from operating activities less capital expenditures was.
Steve Blackwood: It was $303 $4 million in the fourth quarter of 2024 compared to $124 $2 million in 2023.
Cash flow increased in the fourth quarter, primarily due to lower income tax payments, but also due to improved working capital performance.
Steve Blackwood: Capital expenditures were $29 million in the fourth quarter of 2024, compared with $40 $2 million in 2023.
Steve Blackwood: Depreciation and amortization expense was $77 $1 million in the fourth quarter of 2024, compared with $77 4 million in 2023.
Steve Blackwood: For the full year 2020 for free cash flow was $1.11 billion.
Steve Blackwood: We ended the year with just under $2 billion of net debt that is approximately $2 $65 billion of debt.
Steve Blackwood: Less cash of approximately $650 million.
Steve Blackwood: Now turning to our outlook, which includes the acquisition of micro pack, but excludes the <unk> carve out which is not yet closed.
Steve Blackwood: Management currently believes the GAAP earnings per share in the fourth quarter of 2025 will be in the range of $3 92.
Steve Blackwood: The $4 and <unk> per share with non-GAAP earnings per share in the range of $4 80 to $4 90.
Steve Blackwood: And for the full year 2025, we believe the GAAP earnings per share will be in the range of $17 70.
Steve Blackwood: The $18 and 20 <unk>.
Steve Blackwood: With non-GAAP earnings per share in the range of $20.10.
Steve Blackwood: The $21 50.
Robert: I'll now pass the call back to Robert.
Speaker Change: Thank you, Steve we'd not like to take your questions. Paul if you're ready to proceed with the questions and answers. Please go ahead.
Speaker Change: Thank you well now be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.
Speaker Change: Confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys one.
Speaker Change: One moment, please while we poll for questions.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Thank you. Our first question is from Noah <unk> with Goldman Sachs. Please proceed with your question.
Noah <unk>: Hey, good morning, everyone.
Good morning Noah.
Speaker Change: Robert you referenced 4% growth top line in the 2025 guidance.
Speaker Change: Is that is that 3% organic and a point from micro cap micro pack or is that.
Or is that 4% organic.
Speaker Change: No.
Speaker Change: What I mentioned is.
Speaker Change: As you said, a little over 4%, 3.2% organic and about 1% through acquisition acquisitions include micro pack Noelle, but they also include part of the airport, which we acquired for our marine businesses and at Park Towne.
Speaker Change: I had to make that we acquired earlier in the year for digital imaging doors had up to about 1.1% so 1% going.
Speaker Change: Total is four point to yes.
Speaker Change: Okay.
Speaker Change: If <unk> closes on schedule can you talk about what that adds in revenue EBITDA earnings to the year.
Speaker Change: Yeah, I think depends how many causes as you can appreciate but I'm going to say about 15 million a month.
Speaker Change: Sure Okay.
Speaker Change: Okay, Great and then.
Speaker Change: Maybe if you could just talk about the three or slightly over 3%.
Speaker Change: Organic assumption I mean, we've had this discussion for a few quarters now of your short cycle versus your long cycle I.
Speaker Change: I guess you know in the release it sounded it looked like you referenced.
Speaker Change: Kind of a long cycle is still strong. It's look like you were saying short cycle better hard to tell how much better.
Speaker Change: All the leading indicators, they're still look a little kind of better but a moving target. So what are you seeing in those businesses in machine vision and instrumentation and how did you go about deciding what kind of recovery to assume.
Speaker Change: And in the guidance.
Speaker Change: In those businesses.
Speaker Change: Okay.
Speaker Change: So let me start with.
Speaker Change: If I may I'll do it by segment, which is.
Speaker Change: Should make it clear.
Speaker Change: On an organic growth basis, as you and I agreed or target or targets about two 2%.
Speaker Change: If you go to instrument, which includes marine environmental and test and measurement, we expect all tier doors.
Speaker Change: Rob segments to grow with a combined organic growth of three point to 8%.
Speaker Change: In digital imaging we.
Speaker Change: We believe the total digital imaging organically, we've got just under 2% maybe two 8%.
Speaker Change: Aerospace and defense.
Speaker Change: Right now we are targeting at that 4%, but once you include that micro Pac acquisition, we just closed.
Speaker Change: And then jumped up to 8%.
Speaker Change: Engineered systems.
Speaker Change: Oh, yes.
Speaker Change: Assuming you can grow about 2.2% organically so that kind of is the summary of.
Speaker Change: The segments and the growth rate in other words, we expect everything to grow organically.
Speaker Change: The Lord to lower single to mid single digits.
Speaker Change: Okay.
Speaker Change: I appreciate all that detail. Thank you.
Speaker Change: For sure not.
Okay.
Speaker Change: Thank you. Our next question is from Bob Conrad with Jefferies. Please proceed with your question.
Bob Conrad: Hi, good morning.
Speaker Change: Good morning, John right.
John: Yes, I don't know what they called me upfront, but.
John: Maybe just starting with the digital imaging outlook.
John: Lot to unpack in the quarter and you have both short cycle and clear can you maybe just put a finer point on kind of last year into next year, how youre thinking about.
John: As in what Youre seeing out of FLIR defense, and maybe stuff like health care that was a little bit weaker in 2024, how youre kind of thinking about that recovery.
John: Yeah.
John: Rob.
John: Let me do it 24, and then 25.
Speaker Change: And I would break it up between flair and our what we call large historical.
Speaker Change: Digital imaging before fleet so.
Speaker Change: In 'twenty four.
Speaker Change: Over 23.
Speaker Change: We had a little growth in <unk> overall.
Speaker Change: Primarily it was held back by.
Speaker Change: A small business that we have which deals with mid market two dimensional area scan, which is kind of a machine vision business.
Speaker Change: That declined about $40 million.
Speaker Change: So if you take that out the rest of players actually increased about.
Speaker Change: $70 million year over year.
Speaker Change: It increased in almost all areas and increased in our course, which we sell.
Speaker Change: Micro barometers are there as well.
And as.
Speaker Change: India Man demo night cars it increased in AR.
Speaker Change: Tomorrow Goofy broad.
Speaker Change: Well the teams are dead.
Speaker Change: Instruments and cameras and Andre great Marine businesses kind of held steady they were down a little bit but not much. So overall clearly increased.
Speaker Change: Defense seem clear did really well and it increased about 9% in all of it.
Speaker Change: Various sub segments did well.
Speaker Change: So they're now going to 'twenty thrive, we're assuming about.
Speaker Change: Hey.
To date, 3% overall increase because we're just still a little cautious about the.
Speaker Change: Commercial businesses, but.
Speaker Change: Forgive me clear by itself will increase about three 9% but.
Speaker Change: We're still a little cautious about the camera businesses, but we think the defense businesses there are.
Speaker Change: Very healthy because we have really good back backlog.
You go to what we call our traditional digital imaging before players.
Speaker Change: We think the growth is going to be modest.
Speaker Change: Overall growth would be about three 1%, but some of that comes from the <unk> acquisition that we did in mid year. So if you subtract that out yes.
Speaker Change: It's closer to one 2% so when you add those two up.
Speaker Change: Its overall growth.
Speaker Change: But through acquisitions and.
Speaker Change: Organic for the total digital imaging would be about <unk>, 6%.
Speaker Change: We have a third part of the reason, we're being a little cautious, especially in the commercial division.
Speaker Change: Digital imaging, especially the legacy par.
Speaker Change: Is because while we had a little bit of a tailwind.
Speaker Change: This core fish.
Speaker Change: From a foreign exchange, we think we're going to have headwinds right now with the dollar being strong.
Speaker Change: At 1.3% going into 2025.
Speaker Change: And if that doesn't change of course, thats going to affect us so we kind of programming and.
Speaker Change: Into our.
Speaker Change: Projections as we go forward I hope that answered your question Greg.
Speaker Change: That's good and then maybe a follow up I mean, the implied EPS. It seems like you have good.
Speaker Change: Margin expansion into 2025, I think in the past, you've maybe talked about mix of some of that short cycle markets, which it doesn't seem like you're embedding.
Speaker Change: Any big increases in 2025 can you maybe just level set the margin outlook in <unk>.
Speaker Change: Maybe the drivers just given it doesn't seem like mix would be that much of a tailwind given volume expectation.
Speaker Change: Yeah.
Let me go to the overall company.
Speaker Change: We finished the year at 22%.
Speaker Change: We expect that to grow by 80 basis points.
Speaker Change: No.
Speaker Change: If you look at the segments.
Speaker Change: It'll be more like 70 basis points. So you'll go from what is now 22, 4% for the full year 2024 to 24, 1% and 25, so there's growth there.
Speaker Change: If you go to the large business, which is obviously segment digital imaging.
Speaker Change: We finished the year.
Speaker Change: From a segment.
Speaker Change: non-GAAP operating margin at 22, 2% towards the year, we think we'll get about 80 basis points, which is significant.
Next year maybe.
Speaker Change: A little less but between 70 and 80 basis points.
Speaker Change: Some of the other segments.
We've had very strong.
Speaker Change: Margin growth.
Speaker Change: 2022 for example.
Speaker Change: Instruments, our margins between 2200, 24 group 310 basis points, So we're being a little more cautious maybe it'll grow in 2025.
Speaker Change: 45 basis points and the other thing is that in.
Speaker Change: When you went to the aerospace and defense, where we've had.
Speaker Change: Really excellent growth also of 150 basis points in the last two years.
Speaker Change: They're a little cautious.
Speaker Change: Going into 2025, primarily because the mitral pack acquisition is not going to initially have the kinds of margins that we enjoy there which were 28, 6% in 2024 hours.
Speaker Change: Really good maybe 14 15 basis points increase because thats. The micro pack I think of course once that thing is toxin properly.
Speaker Change: Enjoying.
Speaker Change: Margin expansion like all of our acquisitions do I hope that answered your question.
Speaker Change: That's perfect. Thank you.
Speaker Change: For sure.
Speaker Change:
Speaker Change: Thank you. Our next question is from Andrew Buscaglia with BNP. Please proceed with your question.
Andrew Buscaglia: Hey, good morning, guys.
Speaker Change: Good morning, Andrew.
Speaker Change: I was just trying to understand with 2025, so you're talking about a three 2% organic.
Speaker Change: Yeah, just to be clear that would include some FX in that organic number and then do you assume some.
Speaker Change: And how about just short cycle recovery do you assume that when you hear it goes down and can you talk a little bit about the cadence.
Speaker Change: Of your estimate.
Speaker Change: Yeah first.
Speaker Change: Yes, we do.
Speaker Change: Comp headwind from FX as I mentioned at the present time, it's one 2%. So we've dialed that in because we don't know what's going to happen obviously, because this year it was not bad.
This year actually.
Speaker Change: FX was.
Speaker Change: Uh huh.
Speaker Change: Basically 20 basis points headwind, so we have a big headwind so that's that.
Speaker Change: The second part of your question was short cycle.
Speaker Change: We.
Speaker Change: We think that most of our short cycle businesses.
Speaker Change: Should be growing but modestly because of FX, partially like test and measurement and environmental in the low single digits.
Speaker Change: And as I mentioned before what we think fair.
Speaker Change: We'll grow about.
Speaker Change: Three 9% for the year.
Speaker Change: All of that comes from defense.
Speaker Change: The non defense parse withdraw a little less.
Speaker Change: Then of course as I mentioned our job.
Speaker Change: Historical.
Speaker Change: Digital imaging would grow modestly.
Speaker Change: Yeah.
Speaker Change: Okay and.
Actually to accept a higher it's a very good acquisition.
Speaker Change: <unk>.
Speaker Change: What would you if should we assume some accretion to non-GAAP earnings.
Speaker Change: Five months that's closed.
Speaker Change: Yeah I think.
Speaker Change: Well it depends how many cars that I think if I look at the full year.
Speaker Change: As I answered. The question, we think will bring in about 15 million a month in.
Speaker Change: Revenue and we think for the full year, if we were to habits for a full year. It should give us about 15 to 20 <unk>.
Speaker Change: Appreciate it.
Speaker Change: But again, it's a it's just talking in a an acquisition not doing a whole bunch of things in in margin expansion, which we always do in subsequent years.
Robert: Got it okay. Thanks Robert.
Speaker Change: Thank you.
Robert:
Robert: Okay.
Speaker Change: Thank you. Our next question is from Damien Paris with UBS. Please proceed with your question.
Damien Paris: Hey, good morning, everyone.
Speaker Change: Good morning Damian.
Damien Paris: Good morning.
Andrew Buscaglia: I appreciate all the color you provided I was wondering if you could maybe just give us a little bit better sense for the order trends that you've been seeing.
Andrew Buscaglia: Are there any areas that have maybe picked up more meaningfully Nicky you had expected three months ago.
Andrew Buscaglia: Or vice versa.
Damien Paris: Yes Damian.
Andrew Buscaglia: Let me start with.
Andrew Buscaglia: Book to Bill.
Andrew Buscaglia: Ill go to the most recent quarter. We just finished Q4 overall book to Bill for the company is about one point of Florida.
It's positive.
Andrew Buscaglia: But it varies between the various different businesses.
Andrew Buscaglia: In instruments for example.
Andrew Buscaglia: Book to Bill is 112.
Andrew Buscaglia: Which is pretty.
Andrew Buscaglia: Pretty high for us.
Andrew Buscaglia: Marine businesses, leading debt by a 123.
Andrew Buscaglia: And then environmental is positive 1.9, we're a little cautious on TNF, we think it's just a little below.
One maybe nine $5 99 for the whole year digital imaging.
Andrew Buscaglia: There is positive at 1.2 or three.
Andrew Buscaglia: Our job he is starting to grow.
Andrew Buscaglia: Imaging is slightly below one at <unk> 97.
Andrew Buscaglia: <unk> point 96, but we have.
Andrew Buscaglia: We have to take into consideration the auditors they are a little lumpy as there are they already in our engineered system, which is at 116. So overall, we think that positive trend.
Andrew Buscaglia: In our book.
Andrew Buscaglia: Book to Bill.
Andrew Buscaglia: Now if you go to some of our.
Andrew Buscaglia: Commercial where we have the headwinds and we've had it last year is in very specific areas of digital imaging.
As Edwin mentioned primarily in <unk>.
Andrew Buscaglia: Machine vision and machine sensors.
Andrew Buscaglia: <unk> vision is recovering.
Andrew Buscaglia: It's recovering slowly but it is recovery we've had order increases throughout the year machine sensors, where we make the detectors for other folks.
Andrew Buscaglia: That's always lags behind.
Andrew Buscaglia: Six to nine months, so we think that recovery will be closer to the second half of 2025.
Andrew Buscaglia: I hope that answers your question.
Speaker Change: Yes, that's very helpful. Thank you.
Speaker Change: And my second question, so obviously quite a bit has changed since.
Speaker Change: Last quarter with <unk>.
Speaker Change: Election, and a new administration has come in.
Speaker Change: Could you maybe give us.
Speaker Change: Updated thinking about potential policy implications. There was a question of tariffs in China, and Mexico and the U S. Government is certainly an important customer of yours and theirs.
Speaker Change: This new department of government deficiency.
Speaker Change: So could you maybe share your thoughts on how youre thinking about all of that and what it might mean for teledyne.
Speaker Change: Yeah.
Speaker Change: Please remember that.
Speaker Change: I am not any more knowledgeable about anybody else, but I cant related to <unk>.
Our businesses, let's talk about the tariffs first.
Speaker Change: If you look back a couple of years 2022.
Speaker Change: Where we had all of these are.
Speaker Change: Shortages right coming out of Covid.
Speaker Change: We had the.
Speaker Change: Experience peak.
Speaker Change: <unk> supply chain.
Speaker Change: <unk>.
That cost us about $100 million in 2022.
Speaker Change: Why did we do we increased prices.
Speaker Change: Now I'll turn the.
Speaker Change: In some of our businesses that we could but also we improved margins.
Speaker Change: So we made up for it between those two and then our own efficiencies.
Speaker Change: The way the tariffs are laid out at least initially the Canada or Mexico or China.
Speaker Change: We think the impact of those will be less than what we experienced in <unk>.
Speaker Change: 2022, maybe half as much.
Speaker Change: So we think we can deal with that.
Speaker Change: The other thing is the sophistication of the tariffs we have to yet dive into it because we make products in different countries that make products in Canada.
Speaker Change: That then we finish off in the U S. Sometimes we export sometimes is for domestic consumption. So the value add changes but.
Speaker Change: Having said all of that we think we can deal with that.
Speaker Change: In terms of.
Speaker Change: The Dodge.
Speaker Change:
Speaker Change: Efficiency.
Speaker Change: Yeah.
Speaker Change: I think it kind of would favor us.
Partially because.
Speaker Change: Compared to others, partially because.
Speaker Change: Most of our defense businesses as an example.
Speaker Change: It's purchase order businesses with products that we have rather than truck tractor appropriations.
Speaker Change: We also are in.
Speaker Change: In unmanned platforms, if you take our.
Speaker Change: Unmanned air vehicles John vehicles.
Speaker Change: Underwater vehicles, which we have all three.
Speaker Change: Almost 400 plus million dollars our platforms, our gun man a lot of our sensors go on those and versus manned platforms and a lot of our products are also standard products.
Speaker Change: Rather than they highly customized solutions. So I think we will go.
Speaker Change: That makes sense.
Speaker Change: Appreciate all the color.
Speaker Change: For sure. Thank you.
Speaker Change: Our next question is from Jordan <unk> with Bank of America. Please proceed with your question.
Jordan: Hey, good morning.
Speaker Change: Good morning, Jonathan.
Jordan: The defense outlook.
Jordan: The 4% organic growth.
Jordan: How much of that is conservative just when we look at outlay is being up 26% from FY2023 'twenty four I would expect the momentum to continue.
Jordan: So is there other programs that are ending or.
Jordan: It's a mixed bag.
Jordan: Well I don't I don't know if.
Jordan: Hi.
Jordan: 4% number.
Jordan: I mentioned in.
Jordan: That's clear.
Jordan: We think it will be higher than our growth.
It was.
Jordan: Approximately our defense businesses in Q4.
Jordan: So almost 9% and we expect next year to grow another 6% so.
Jordan: <unk>.
Jordan: That's.
Jordan: It's not as conservative now.
Jordan: The problem is that.
Jordan: Really well.
Jordan: We don't know what's going to happen to the various programs yet.
Jordan: But as I mentioned.
Jordan: If you take.
Jordan: Uh huh.
Speaker Change: The field that we received which are unmanned systems, primarily and then of course electronic warfare and then of course.
Speaker Change: Observations using E I R.
Speaker Change: Those favor us by and large regardless of which programs go forward. So.
Speaker Change: I'm pretty bullish about the defense part of our businesses.
Speaker Change: Got it okay. Thank you so much.
Speaker Change: For sure.
Speaker Change: Thank you. Our next question is from James Ricchiuti with Needham <unk> Company. Please proceed with your question.
James Ricchiuti: Hi, Thanks, Good morning, Hey, Robert are you at all.
Speaker Change: <unk> bye.
Speaker Change: The slow recovery in that legacy digital imaging business.
Speaker Change: Uh huh.
Speaker Change: Yes.
Speaker Change: To be very honest I am.
Part of it is really <unk>.
Speaker Change: People are very cautious in.
Speaker Change: Building up inventories stretch, especially our distributors.
Speaker Change: Partially.
Speaker Change: The China effect.
Speaker Change: In terms of the imports, even though we don't.
Speaker Change: Export as a total company that much to China, we do in digital imaging.
Speaker Change: Partially because they are.
Speaker Change: Building.
Speaker Change: Their own system and.
Speaker Change: They own sensors.
Speaker Change: But.
Speaker Change: By and large Jim.
Speaker Change: These are short cycle businesses.
Speaker Change: They can turn on 234 weeks.
Speaker Change: We don't have a lot of visibility.
And.
Speaker Change: I can only talk about what's happened, it's very hard to predict where things are going but overall, if you look at the book to Bill.
Speaker Change: Even though you know when your job.
Speaker Change: Bidding is low book to Bill is it looks healthy.
Speaker Change: And enjoying book to Bill positive book to Bill in our camera businesses for the last three quarters. So.
Having said all of that yeah, I was surprised on why its not recovering as fast as we should I guess, partly because other people are conservative in building inventory at our distributors.
Speaker Change: And my last question.
Speaker Change: I would add too is.
Speaker Change: Some of our customers.
Speaker Change: We are trying to.
Speaker Change: Lower their prices that they pay us.
Speaker Change: And frankly, we won't take those or because.
Speaker Change: <unk>.
Speaker Change: The business is what the business is now.
Speaker Change: We're not going to lose margin just to yes.
Speaker Change: Revenue.
Speaker Change: Yeah.
Speaker Change: Got it.
Speaker Change: It appears there within that commercial business.
Speaker Change: And I think you indicated this appears to be some conservatism embedded in the full year outlook. If you were to look at areas that have the potential to maybe do a little better.
Speaker Change: Would you say would be some of the instrumentation business or.
Speaker Change: Potentially in the digital imaging business, maybe things starting to come back as we get through.
Speaker Change: Yeah, it's destocking that people have been talking about for a while now.
Speaker Change: Yeah.
Speaker Change: <unk>.
Speaker Change: I think.
Speaker Change: I would start with instrumentation.
Speaker Change:
Speaker Change: Some of the conservative is instrumentation and primarily in test and measurement.
Speaker Change: Where does assuming the growth there is going to be.
Speaker Change: Two 5% or so but it could be a lot more aggressive it's.
Speaker Change: Its been doing better and better as the years gone on in 2024.
Speaker Change: In.
Speaker Change: Digital imaging correctly, we have a slew of new products going out, which you think will be much more competitive.
Speaker Change: So yeah, we are being conservative having said that.
At this time, it's prudent to be conservative, but we'd always be now as you know us well.
We've always been conservative in everything that we do or say you have to take that into consideration.
Speaker Change: Understood. Thanks, a lot.
Speaker Change: For sure.
Speaker Change: Okay.
Speaker Change: Thank you. Our next question is from Joe Giordano with TD Cowen. Please proceed with your question.
Joe Giordano: Hello Andre.
Speaker Change: For the year.
Joe Giordano: Hi, Joe I think you got cut off the first sentence I didn't get it.
Richard: Hey, Richard.
Speaker Change: Yeah, I'm, just asking about our free cash flow outlook for the year.
Richard: Yeah.
Richard: Just to reiterate I like beating this one because we did so well we got free cash flow of 111.
Richard: <unk>.
Richard: Steve mentioned.
Speaker Change: We think it'll be over $1 billion, if we hit $1 billion again I'll be happy.
Speaker Change: We had some lower taxes, but we also enjoyed some improvement in our job.
Working cap at all then.
Speaker Change: Inventory, we had some advanced payments on some programs those may not happen, but having said all of that.
Speaker Change: I think $1 billion is a good number.
Speaker Change: And then I know this question has been asked on other calls and you've been consistent with your answers, but it's a question we get from investors fairly often who want to look at teledyne, but given the free cash flow generation you have in that you've shown the ability to be a bit more flexible with buybacks lately is the dividend.
Speaker Change: All are interesting to you guys to bring in a new class of investors, who can't currently invests in the shares.
Uh huh.
Speaker Change: That's it that's a tough one you know.
Speaker Change: Okay.
Speaker Change: Just a little dividend I don't think there was a lot of good although I know companies that do that.
Speaker Change: Right now I think.
Speaker Change: We're better off if we can use our money to buy companies, especially since our acquisition pipeline seems to be a richard that it has been.
Speaker Change: Having said that when our stock was what we thought then they are valuing <unk>.
Speaker Change: Bought back stock, which is another way of returning cash to investors.
Speaker Change: Yes. Thank you for what it's worth from what we're hearing company people would be fine with a small dividend. If there is a view that it could get somewhat larger over time, but that's just that's just the feedback we're getting so thanks guys.
Speaker Change: Thank you for that input thank you.
Speaker Change: Okay.
Speaker Change: Thanks.
Speaker Change: Thank you there are no further questions at this time I would like to hand, the floor back over to Jason bandwidth for any closing comments.
Speaker Change: Again, thanks, everyone for joining us this morning I'll.
Speaker Change: Follow up questions. Please feel free.
Speaker Change: The number on the earnings release and a replay of this is available via webcast and Ireland.
Speaker Change: Thank you operator, you can conclude the call we'd appreciate it thanks Paul.
Speaker Change: This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.