Q2 2025 Teledyne Technologies Inc Earnings Call
Operator: Thank you for joining this call.
Operator: Here's our first speaker, Mr. Jason VanWees.
Welcome to tudeen second quarter earnings call. Here's our first Speaker Mr. Jason Baynes.
Operator: Please stand by. Thank you and welcome to Teledyne's second quarter earnings call.
Please stand by.
Operator: Here's our first speaker, Mr. Jason VanWees, please go ahead.
Jason VanWees: Thank you and good morning, everyone.
Speaker Change: Thank you and welcome to tudeen. Second quarter earnings call. Here's our first Speaker, Mr. Jason Van Weiss. Please go ahead.
Jason VanWees: This is Jason VanWees, Vice Chairman.
Jason VanWees: I'd like to welcome everyone to Teledyne's second quarter 2025 earnings release conference call.
Jason VanWees: We released our earnings earlier this morning before the Joining me today are Teledyne's Executive Chairman, Robert Mehrabian, President and CEO, George Bobb, EVP and CFO, Steve Blackwood, and Melanie Cibik, EVP, General Counsel, Chief Compliance Officer, and After remarks by Robert, George, and Steve, we will answer your questions.
Speaker Change: Thank you and good morning everyone. This is Jason been with Vice chairman. I'd like to welcome everyone to tine, second quarter 2025 earnings release conference. Call, we released our earnings earlier this morning before the market opened
Jason VanWees: But, of course, before we get started, our attorneys have reminded me to tell you that all forward-looking statements 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.
Operator: In order to avoid potential selective disclosures, this call is simultaneously being webcast and a replay, both via webcast and dial-in, will be available for approximately one month. Thank you, Jason.
Joining me today are televised executive. Chairman Robert Moravian president and CEO George Bobb EBP. And CFOs Steve Blackwood and Melanie sabic EVP General Council Chief compliance officer and secretary after remarks by Robert George and Steve, we will ask your question. But of course before we get started, our attorneys have reminded me to tell you that all 4 looking statements. This morning are subject to various assumptions risk 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 dialing will be available for approximately 1 month.
Robert Moravian: Here's Robert.
Operator: And good morning, everyone. And thank you for joining our call.
Jason VanWees: Today, we report a record cross-release sales. We've achieved greatest total. for an organic sales growth in almost three years. Second quarter sales increased 10.2%. half organic, half aqua. and accelerated for three quarters in a row. There's also increased organically in every set. Non-GAAP Earnings Per Share The country's 13.5% from last year, and we're also a record for any second quarter. Orders exceeded sales for the second seven. Our energy and defense businesses continue to perform very well. due to market strength, but also our specific portfolio of technology. serving growing sectors. such as Unmanned Air and Subsea Systems. NATO Defense Spend and Offshore Energy.
Robert Moravian: Thank you, Jason, and good morning everyone. And thank you for joining our call.
Uh today we reported the record cross to release sales.
Robert Moravian: We've achieved greatest total.
Or an organic sales growth in almost 3 years.
Robert Moravian: Second quarter sales increased 10.2%, half organic, half acquisitions.
And accelerated for 3, quarters in a row.
Robert Moravian: There's also increased organically in every segment.
Robert Moravian: Non-gaap earnings per share.
Robert Moravian: Increased 13.5% from last year and we're also a record for any second quarter.
Robert Moravian: Finally.
Robert Moravian: Orders exceeded sales for the second. 7th consecutive quarters our energy and defense businesses. Continue to perform very well.
Due to Market strength. But also our specific portfolio of Technologies serving growing sectors.
Robert Moravian: Such as unmanned air and subk systems.
Space-based sensors.
Robert Moravian: NATO defense, spending and offshore energy Productions.
Jason VanWees: Sales from our shorter cycle environmental and test and measurement instrumentation businesses also increased single digits. And this is about the greatest level in a...
Sales from our shorter cycle, environmental and test and measurement, instrumentation. Businesses also increase single digits.
Robert Moravian: Mixing of digits. And this is about the greatest level in a few years.
Jason VanWees: Organic sales growth in digital imaging was also the most in three primarily resolved and healthy growth in our Teledyne Flares defense and industrial.
Robert Moravian: Organic sales growth in digital imaging. Was also the most intriguing.
Robert Moravian: From Healthy Growth, in our tudeen, flares defense.
And Industrial businesses.
Jason VanWees: Nevertheless, We're being a little cautious. Worrying about where this was, second quarters. in our short cycle. resulted from accelerated demand. in advance of. and U.S.
Robert Moravian: Nevertheless.
Robert Moravian: We're being a little cautious.
Robert Moravian: Worrying about whether it's worth second quarter strength in our short cycle businesses resulted from accelerated. The demand
in advance of
Jason VanWees: Trade Policy Announcements in the first quarter. We're currently forecast. that totaled sales in the third quarter. to remain essentially flat.
Robert Moravian: planned us trade policy announcements in the third quarter.
Robert Moravian: Consequently.
Robert Moravian: We're currently forecasting that total sales in the third quarter. We remain essentially flat with the second course.
Jason VanWees: Despite spending $770 million years to date on Our current debt to. Leverage Ratio. that to EBDA is 1. with only six straight dead. Approximately $1.17 billion out of $1.2 billion available in our credit.
Robert Moravian: Despite spending 770 million dollars year to date on acquisitions.
Robert Moravian: Our current debt to.
Robert Moravian: Registration.
Robert Moravian: That will be the a is 1.6 with only 6, Straight debt and approximately 1.17 billion out of 1.2 billion available in our credit facility.
Jason VanWees: While we're pursuing a number of acquisitions, mostly smaller ones. We will consider stock repurchases. where we feel larger acquisitions are too pricey. as we found in the second quarter. and where Teledyne offers the best value.
Robert Moravian: while we pursuing a number of our positions, mostly smaller ones at this time,
Robert Moravian: We will consider stock repurchases. Where we feel larger Acquisitions are too pricey.
As we found in the second quarter.
Robert Moravian: And where tudeen offers the best value.
Jason VanWees: Therefore, Our Board of Directors. to increase our stock repurchase authorization from $896 million to $2 billion. And we will use that, as I said before, if appropriate.
Robert Moravian: Therefore,
Our board of directors, increased, our stock repurchase authorization from 896 million to 2 billion dollars.
Robert Moravian: And we, uh, will use that as I said before.
George Bobb: George will now briefly comment on the performance of our four sets. Thank you, Robert. In the digital imaging segment, second quarter sales increased 4.3 percent, which was the greatest year-over-year growth in three years. The performance largely reflected record growth of Teledyne FLIR, where the defense and industrial businesses increased nicely, largely driven by international defense sales, as well as complete unmanned air systems and commercial infrared components and subsystems for the overall unmanned aircraft. We had another quarter of strong orders, with a total digital imaging book-to-bill of 1.1 times, but it was especially nice to see bookings of 1.2 times, in our industrial and scientific vision systems businesses' collections.
Robert Moravian: If appropriate.
Robert Moravian: George will not briefly comment on the performance of our 46.
Robert Moravian: Thank you, Robert in the digital imaging segment, second quarter sales increased 4.3% which was the greatest year-over-year growth in 3 years.
Robert Moravian: performance largely reflected record growth of pine Fleer
Robert Moravian: where the defense and Industrial businesses increased nicely. Largely driven by International defense sales as well as complete unmanned air systems and Commercial infrared components and subsystems for the overall unmanned Market.
Robert Moravian: We had another quarter of strong orders with a total Digital Imaging book to Bill of 1.1 times. But it was especially nice to see bookings of 1.2 times in our industrial and scientific Vision systems businesses collectively.
George Bobb: Non-GAAP operating margin decreased marginally due in part to greater severance.
George Bobb: which we did not exclude from non-GAAP markets. In the Instrumentation segment, which consists of our Marine, Environmental, and Test and Measurement businesses, second quarter total sales increased 10.2% for... Overall sales of marine instruments increased 16% due to both strong offshore energy production and subsea defenses. Sales of environmental instruments increased 5.6%, primarily due to higher sales of process gas safety and emissions monitoring. Sales of electronic test and measurement systems, which include oscilloscopes, protocol analyzers, and ethernet traffic generators, increased 5.5% year over year. Instrumentation operating margin in the second quarter increased 149 basis points to 27.6 and 134 basis points on a non-GAAP basis to 28.5.
Robert Moravian: Non-gaap operating margin decreased marginally due in part to Greater Severance costs, which we did not exclude from non-gaap margins.
Robert Moravian: In the instrumentation segment, which consists of our marine environmental and test and measurement businesses.
Robert Moravian: Second quarter, total sales increased 10.2% for last year.
Robert Moravian: Overall sales of marine instruments increased 16% due to both strong offshore energy production and sub seed defense sales.
Robert Moravian: Sales sales environmental instruments increased 5.6%.
Robert Moravian: Primarily to higher sales of processed gas, safety and Emissions monitoring instrumentation.
Robert Moravian: Sales of electronic test and measurement systems, which include a philosophy protocol analyzers and ethernet traffic, generators increased 5.5% year-over-year.
Robert Moravian: Instrumentation operating margin in the second quarter increased 149 basis points at 27.6% and 134 basis points on a non-gaap basis to 28.5%.
George Bobb: In the aerospace and defense electronics segment, second quarter sales increased 36.2%. primarily driven by acquisitions and organic growth of defense electronics. While commercial aerospace aftermarket sales increased, this was offset by a decline in OEM sales due in part to on-again, off-again export.
Robert Moravian: In the Aerospace and defense Electronics, segment, second quarter sales. Increased 36.2% primarily driven by Acquisitions and organic growth of Defense, Electronics products.
George Bobb: Overall segment operating profit increased year-over-year, but gap and non-gap segment margin decreased year-over-year, but increased sequentially, primarily due to comparatively lower current margins at our recently acquired business.
Robert Moravian: While commercial Aerospace. Aftermarket sales increase. This was offset by a decline, in OEM sales, due in part to on again off again, export restrictions.
overall segment, operating profit increased year-over-year but gaap and non-gaap segment, margin decreased year-over-year, but increased sequentially primarily due to comparatively lower current margins at our recently acquired businesses
Robert Mehrabian: For the engineered system segment, second quarter revenue increased 3.3%, and segment operating profit increased 395 basis points, due in part to a relatively easy comparison with last year, but also strong execution on a number of government programs. I will now pass the call back to Rob.
Robert Moravian: for the engineered system segments, second quarter Revenue increased 3.3%.
Robert Moravian: And segment operating profit increased to 395 basis points. Due in part to a relatively easy comparison with last year, but also strong execution on a number of government programs.
Robert Mehrabian: Thank you, George.
Robert Moravian: I will now pass the call back to Robert.
Robert Moravian: Thank you, George. Uh,
Robert Mehrabian: In conclusion, I want to thank everyone at Teledyne for delivering a double digit top and bottom line growth. Also. We're very optimistic about their long term. Our growth in our long cycle business portfolio remains very stable. Most of our short cycle businesses have returned to reasonable sales and orders.
Speaker Change: In conclusion, I want to thank everyone at tudeen for delivering a double digit.
Top and bottom line growth.
Speaker Change: Also.
Speaker Change: We're very optimistic about their long-term Outlook.
Speaker Change: Our growth in our long cycle. Business, portfolio, remains very stable.
Speaker Change: And most of our short cycle businesses have returned to reasonable sales and orders growth.
Robert Mehrabian: As I mentioned earlier, we're a bit cautious. because of the near-term pullings, perhaps as a consequence of various tariff scenarios.
Speaker Change: As I mentioned earlier, we're, we're a bit cautious.
Robert Mehrabian: Having said that. We remain very optimistic about the future, given our portfolio, and where the markets in our domain are moving.
Speaker Change: Because of the near-term pullings perhaps as a consequence of various tariff scenarios.
Speaker Change: Having said that?
Operator: With that, I want to turn it to coffee. Thank you, Robert, and good morning.
Speaker Change: With remain very optimistic about the future, given our portfolio and where the markets in our domain are moving with that. I want to turn it to call to Steve.
Stephen Blackwood: I will first discuss some additional financials for the quarter, not covered by Robert, and then I will discuss our third quarter and full year 2025 outlook. In the second quarter, cash flow from operating activities was $226.6 million compared with $318.7 million in 2024. Free cash flow, that is cash flow from operating activities, less capital expenditures, was $196.3 million in the second quarter of 2025, compared with $301 million in 2024.
Speaker Change: That's our third quarter and full year 2025 Outlook.
Steve: In the second quarter cash flow from operating activities was 226.6 Million compared with 318.7 million in 2024.
Steve: Free cash flow. That is cash flow from operating activities. Less Capital. Expenditures was 196.3 million dollars in the second quarter of 2025 compared with 301 million in 2024.
Stephen Blackwood: Cash flow decreased year over year in the second quarter, primarily due to higher income tax payments in the second quarter of 2025 compared with 2020. Capital expenditures were $30.3 million in the second quarter of 2025 compared with $17.7 million in 2024. Our appreciation and amortization expense was $86.5 million in the second quarter of 2025, compared with $77.8 million in 2024. We ended the quarter with $2.3 billion of net debt, that is approximately $2.62 billion of debt, less cash of $310.9 million.
Steve: Cash flow decreased year-over-year in the second quarter primarily due to higher income tax payments. In the second quarter of 2025 compared with 2024,
Steve: Capital expenditures were 30.3 million in the second quarter of 2025 compared with 17.7 million in 2024.
Appreciation in amortization. Expense was 86.5 million in the second quarter of 2025 compared with 77.8 million in 2024?
Stephen Blackwood: Now turning to our Management currently believes that GAAP earnings per share in the third quarter of 2025 will be in the range of $4.39 to $4.54 per share, with non GAAP earnings per share in the range of $5.35 to $5.45. And for the full year 2025, we believe that GAAP earnings per share will be in the range of $17.59 to $17.97. with non-GAAP earnings per share in the range of $21.20 to $21.50.
Steve: We ended the quarter with 2.3 billion dollars of net. Debt that is approximately 2.6 billion dollars of debt less cash of 310.9 million.
Steve: Now, turning to our Outlook.
Steve: Management. Currently believes that gaap earnings per share in the third quarter of 2025 will be in the range of 4.39 to 4.54 per share with non-gaap earnings per share in the range of 5.35 to 5.45.
Steve: And for the full year 2025, we believe that Gap earnings per share will be in the range of 17.59 to 17.97.
Robert Mehrabian: I will now pass the call back to Robert. Thank you, Steve.
Robert Moravian: With non-gaap earnings per share in the range of $21.20 to $21.50. I will now pass the call back to Robert
Operator: We'd now like to take your questions. Carrie, if you're ready to proceed with the question and answer, please go ahead. Thank you.
Speaker Change: Thank you, Steve. Uh, we'd now like to take your questions Carrie, if you're ready to proceed with the question and answer, please go ahead.
Operator: We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question. You may press star 2 if you would like to remove your question from the queue.
Speaker Change: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.
Operator: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start key.
Speaker Change: You may press star 2 if you would like to remove your question from the queue.
For participants using, uh, speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Andrew Buscaglia: And our first question will come from Andrew Buscaglia with BNP Paribas Asset Management. Hey, good morning, guys. Morning, Andrew.
Andrew Basaglia: And our first question will come from Andrew basaglia with BMP, parabas, Asset Management.
Good morning, guys.
Speaker Change: Morning, Andrew.
Robert Mehrabian: Just wanted to touch on your guidance for Q3 and some of the caution you're citing. Where exactly is this pull forward within your business segments? And can you comment on, are you seeing this more with some of the short cycle businesses versus long cycle, if you could add that to your comment? Yeah, I think, Andrew, the comment is primarily about short cycle businesses. Because with longer cycle businesses, we have reasonably good visibility as to where things are and where our programs are. Short cycle businesses. especially things like instruments. We get, like, sometimes two weeks, two weeks, three weeks book-to-bill cycle times and we kind of are a little cautious, we're worried that maybe $15 to $20 million, mostly in that domain, may have been pulled in.
Speaker Change: Just wanted to touch on uh your guidance for Q3 and some of the caution you're citing. Um where exactly is this pull forward within your business segments and can you comment on, you know, seeing this more on with some of the short cycle businesses versus long cycle? If you could
Speaker Change: uh, add that to your comments.
Andrew Basaglia: yeah, I think uh Andrew the comment is primarily about short cycle businesses because as long as cycle businesses we have reasonably good visibility as to where things are and where our programs are
Speaker Change: short circuit of businesses.
Andrew Basaglia: Especially things like instruments.
Robert Mehrabian: We're not sure. But listening to our folks, that seems to be maybe the case.
Andrew Basaglia: We get like sometimes 2 weeks, 2 weeks, 3 weeks uh book to build cycle times. And we kind of are a little cautious. We worried that maybe 15 to 20 million dollars. Uh, mostly in that domain, uh, may have been proved in no,
Andrew Basaglia: We're not sure.
Robert Mehrabian: There's little of that in our large, long-cycle businesses like Clear Defense, for example.
Andrew Basaglia: uh, but listening to our folks, that seems to be maybe the case there's little of that in our lives longer cycle businesses, like Fleer defense, for example,
Robert Mehrabian: Okay, that's helpful. Can you comment on order activity in some of these longer cycle businesses? I know you guys had a press release out, you know, supporting US's stance on dominance and wondering if you've seen an order uptick within unmanned systems or the components you supply to them? Yeah, I think Specifically, if you look at our unmanned systems in FLIR. And generally in FLIR, first quarter we saw book to bill of 1.17, this quarter just a little over 1. um Even digital imaging excluding fear, recognizing that the comps are easier, we saw an uptick on orders book-to-bill as high as 1.2.
Andrew Basaglia: okay, that's helpful. Um, can you, um, order activity in some of these longer cycle businesses? I know you guys had a press release out, um, you know, supporting us is stance on dominance and wondering if you've seen an order uptick within unmanned systems or the components you supply to them.
Andrew Basaglia: Yeah, I think, uh,
Andrew Basaglia: specifically, if you look at the Iron Man systems in clear,
Andrew Basaglia: And generally in clear uh first quarter we saw Book 2, bill of 1.17 this quarter. Just a little over 1.
Andrew Basaglia: um,
Andrew Basaglia: Recognizing that the comps are easier.
Andrew Basaglia: uh, we saw a optic on
Andrew Basaglia: U orders book to build as high as 1.2.
Robert Mehrabian: and the other businesses.
Um, in the other businesses.
Robert Mehrabian: Lumpy businesses like engineer systems is way over one, but we know that's lumpy. Overall, I think our book to build has been healthy. And as we mentioned earlier, this is like, it's about 1.1 across all of our portfolio. And it's seven consecutive a quarter that we've seen that. So, you know, looking at that, you have to be positive. and I am. But we're always a little cautious, maybe too cautious.
Andrew Basaglia: lumpy businesses like engineer systems is way over 1, but we know that slumpy
Andrew Basaglia: overall, I think our book to bill has been healthy, and as we mentioned earlier,
Andrew Basaglia: this is like, uh, it's about 1.1 across all of our portfolio and its 7 consecutive uh,
Andrew Basaglia: Uh, quarter that we've seen that. So, you know, looking at that, you have to be positive and I am
Andrew Basaglia: Uh, but we always a little cautious.
Operator: Let me leave it at that. Thank you. Thanks.
Andrew Basaglia: Maybe too cautious. Let me leave it at that.
Andrew Basaglia: Thank you.
Andrew Basaglia: Thanks Andrew.
Damian Karas: Next question comes from Damian Karas with UBS. Hey, good morning, everyone. Better to be safe and cautious than sorry, Robert.
Andrew Basaglia: Next question comes from Damian Keras with UBS.
Damian Karas: But I do want to ask you.
Hey, good morning everyone. And better better to be safe and cautious and and sorry, uh, Robert.
Andrew Basaglia: But I I do want to ask you.
Damian Karas: Yeah, so I did want to kind of maybe push you a little bit on on digital imaging. You know, the book to bill is strong. I think this is the second quarter of 1.1 book to bill or higher.
Andrew Basaglia: Yeah. So I did want to kind of maybe push you a little bit on on digital imaging. I you know the book, the bill um uh strong I think this is the second quarter of uh 1.1 uh book the bill or higher. Um
Robert Mehrabian: But yet you still really only have, I think, modest organic sales growth factored into the second half. So could you just help us reconcile why we wouldn't see more of a meaningful pickup in sales just based on those bookings?
Speaker Change: But yet you still really only have I think modest organic sales growth, factored into the second half so could you just help us reconcile? Why we wouldn't see more of a meaningful pickup in sales? Just based on those bookings.
Robert Mehrabian: Yeah, you know, it's a kind of a story of two chapters. FLIR is strong. Even when some of the short cycle businesses, like in cameras, etc., in DOSA2B go down, Our industrial businesses seem to be holding up pretty well in the FLIR, you know, our ability to sell cores, infrared cores, as well as cameras, they seem to be all right. Of course, player defense is just doing really well.
Speaker Change: yeah, you know, it's a kind of uh,
Speaker Change: Story of 2, uh, chapters.
Speaker Change: Uh, flare is strong.
Speaker Change: even when, uh, some of the short cycle businesses, like in cameras, Etc, in
Speaker Change: Uh uh do say 2, we go down.
Speaker Change: Our industrial businesses seem to be holding up pretty well in uh, in the flare, you know, our uh uh, both our ability to sell Coors infrared, cores, as well as cameras. They seem to be. All right.
Speaker Change: Of course, play defense is just doing really well.
Robert Mehrabian: Some of the problems that we have is in our DALSA E2B. Now remember, that business has been on it. It's been down. And while we're getting a little order pickup, it's easier come when you go to book to build a business that's done. On the other hand, George and the managers in that business have been able to take costs out. Reorganize where necessary. As George mentioned, we took a little hit in Q2 because we count our cost expenses, cost out expenses in our non-GAAP. So that business is stabilizing again.
Speaker Change: some of the problem that we have,
Speaker Change: Is.
Speaker Change: In our Dalai 2v. Now remember that business has been on it. It's been down.
Speaker Change: And while we're getting a little order pickup, it's easier comp when you go to book to build a business that's done.
Speaker Change: On the other hand, your managers in that business.
Speaker Change: Have been able to take cost out.
Speaker Change: reorganize where necessary, as George mentioned we took a little hit in Q2 uh because we can't
Speaker Change: Uh, our cost uh, expenses cost out expenses in our long Gap.
Speaker Change: So that business is stabilizing.
Robert Mehrabian: We think some of our longer cycle businesses that we see growing are going to be more like Q4 and maybe early 26.
Speaker Change: Again.
Robert Mehrabian: Maybe that's why that we're kind of where we are in terms of what you mentioned being a little cautious. Okay, but just to just to clarify, you haven't really seen the short cycle start falling off in in kind of real time, but but Your assessment was, hey, maybe there's 15 to 20 million of a little uplift that we got, but you haven't seen that. No.
Speaker Change: we think some of our longer cycle businesses that we see growing are going to be more like Q4 and maybe early 26, maybe that's why, uh,
Speaker Change: that which uh, kind of where we are in terms of what you mentioned, being a little cautious,
Speaker Change: Okay, but just the just to clarify, you haven't really seen the short cycle start falling off in in kind of real time, but but your assessment was hey maybe there's 15 to 20 million of a little uplift that we got.
Speaker Change: But you haven't seen that yet.
Robert Mehrabian: You know, there are different forces operating in our management. Some of them are a little more cautious than others. And frankly, over the last 25 years, we've learned the hard way that being a little cautious pays dividends over the long term, even though sometimes you look at your stock after an earnings like today and say, no, no good deed should go unpunished. Having said that. We will be fine.
No. Uh
Speaker Change: You know, there are different forces operating.
Uh, you know, management.
Speaker Change: Some of them are a little more cautious than others.
And frankly, um, over the last 25 years, we've learned the hard way that being a little cautious. Um, Pace did it runs over the long term even though sometimes you look at your stock after an earnings like today and say no no good. Did you go and punish
Speaker Change: having said that?
Operator: Um, you know, I think we're, we're just gonna Okay, fair enough. Really appreciate that.
Speaker Change: We will be fine. Um, you know, I think we're we're just going to be fine.
Damian Karas: And then my second question, the aerospace and defense margins did come in quite nicely.
George Bobb: Would you maybe be able to elaborate a little bit, you know, Was there any pricing or business mix factors, productivity? Maybe just give us a sense for what drove that margin strength, and is there anything that we should be bearing in mind the rest of this year as we update our model?
Speaker Change: Would you maybe be able to a elaborate a little bit, you know?
Was, was there any pricing or or business mix factors productivity? Uh, maybe just give us a sense for what drove, that margin strength and is there anything that we should be bearing in mind, uh, the rest of this year as we update our our models,
Robert Mehrabian: Yeah, Damian, I'm going to let George pick some of this up. But in general, what happens is if you look at the margin we When we make acquisitions, The margins go down because our acquired businesses by and large, have a lower margins. And if you look at Q1, Q2, Q3, Q4, our margins improve with those acquired businesses. Now, if you exclude the acquired businesses, yes, our margins are very healthy, excellent execution.
Speaker Change: yeah, Damian I'm going to let George pick some of this up, but
George: In general. What happens is, if you look at the margins,
Speaker Change: we, uh,
Speaker Change: When we make acquisitions.
Speaker Change: The margins go down because our acquired businesses.
George Bobb: George, you want to comment on that? Yeah, I think I would just say in the legacy defense electronics businesses and the aerospace business, margins continue to be strong. In the new acquisitions, we acquired two companies here in the last several months, MicroPak and Keyoptik. We had a good uptick in Q1 in the margins in MicroPak, and in both of those acquisitions, we're doing what we always do, which is work on improving the margins as we integrate those companies.
Speaker Change: By and large, have a lower margins. And uh, if you look at q1 Q2 Q3 Q4 our margins improve in those acquired businesses. Now, if you exclude the acquired businesses. Yes. Our margins are very healthy. Excellent, execution. George, you want to comment on that? Yeah, I think I would just say in the Legacy. Defense Electronics. Businesses in the Aerospace business margins, continue to be strong, um, in the new acquisitions. We acquired 2 companies here in the last several months micropack and key optic. We had a good uptick in q1 in the margins and micropack and in both of those Acquisitions. We're doing what we always do which is work on improving the margins, as we integrate those companies.
Robert Mehrabian: Yeah, Damian, just to kind of put things in perspective, I think my benefit or shareholders might benefit from this analysis. If you, for a second, if you exclude FLIR. We've spent $1.9 billion in cash acquiring businesses that are of some significant $47 What we paid for them at the time we acquired them was nine times ZBDA. If you look at the same businesses today and you look at the EBDA and say, what did we pay for it? It's $3.4 trillion. So that is really just simply improved margins, even when you include FLIR, which is only, we've only had it three years, even there, the, what we paid when we acquired and what it is today, there's about a hundred basis point improvement.
Speaker Change: Yeah, Damian just to kind of put things in perspective. I think might benefit our our Cheryl does my benefit from this analysis.
Speaker Change: if you for a second, if you exclude Fleer
We've spent 1.9 billion, in cash, acquiring businesses that are of some significant. 47 of them.
What we paid for them. At the time we acquired them was 9 times, the bbda.
Speaker Change: If you look at the same businesses today, and you look at the ebda and say, what did we pay for? It is 3.4 times.
Speaker Change: so that is really just simply improved margins, even when you include fear which is on, we've only had it 3 years
Speaker Change: even there.
Robert Mehrabian: Having said that, that's the, that's really the operating. book that we have, Acquire Businesses, Don't Overpay. focus on improving margins, do your 80 20 anything else you have to do and go from there, which, you know, you look at our overall businesses, no matter which year, how many which Same story.
Uh, that what we paid when we Acquired and what it is today, there's about a 100 basis point Improvement.
Having said that?
Speaker Change: That's the that's really the uh operating book that we have acquired businesses. Don't overpay
Speaker Change: Focus on.
improving margins, do your 8020, anything else you have to do and uh, go from there which, you know, you look at our overall businesses, no matter which year how many, which segments the same story
Operator: Okay, great. Thanks a lot.
Operator: Good luck out there.
Gregory Konrad: Thank you very Our next question comes from Greg Konrad with Jeffries. Good morning. Morning, Jeb.
Speaker Change: Okay, great. Thanks a lot. Uh, good luck out there.
Thank you very much.
Speaker Change: Our next question comes from Greg Conrad with Jeffries.
Good morning.
Gregory Konrad: Maybe just to follow up on on your guidance that Q3 would look similar from a top line perspective relative to Q2.
Speaker Change: Morning.
Robert Mehrabian: I mean, I know what you did with the EPS guidance, but has there been any change to the the revenue guidance you gave on the last call, just as we think about kind of expectations for Q4? Well, let me stay with Q3 for a second if I may, Greg. The way we're looking at it is we're looking at getting some uptake from acquired business. in Q3, maybe about 5%, similar to Q2, and very little organic. And again, the reason we're doing that is we're just kind of looking at our short cycle businesses, it's almost impossible to predict.
Speaker Change: Um, maybe just to, to follow up on, on your guidance, that Q3 would look similar from a top line perspective, um, relative to Q2. I mean, I I know what you did with the EPS guidance, but has there been any change to the the revenue guidance you gave on the last call? Just as we think about kind of expectations for Q4,
Speaker Change: Well, let me stay with Q3 for a second if I make Greg.
Speaker Change: the way we're looking at it is, we're looking at getting some uptake from acquired businesses in Q3
Speaker Change: maybe about 5% similar to Q2 and very little organic,
Robert Mehrabian: where they're going to end up.
Speaker Change: And again, the reason we're doing that is we're just kind of looking at our short cycle businesses. It's almost impossible to predict
Robert Mehrabian: Now, we have raised overall, we've raised our guidance for the year, of course, primarily because Q2 came in higher. But even with a flat Q3, we've raised our guidance for the year in terms of revenue by almost 20 plus million dollars. And given our conservative nature, for us, that's a hefty increase. So we think for the year, we'll have probably about 6 billion, 30, maybe a little more. We'd have growth of 6.3%. We're assuming most of that 4% plus 4.2% will come from acquisition, maybe 2 plus percent from organic, but then we are also looking at effects and other things.
Speaker Change: where they're going to end up.
Speaker Change: Uh, now we have raised.
Speaker Change: Overall, uh, we've raised our uh, guidance for the year.
Speaker Change: Of course, primarily because Q2 came in higher. But even with a flat, Q3 we raised our guidance for the year, in terms of Revenue by almost 20 plus million dollars. And
Speaker Change: Uh, given our conservative nature for us. That's a hefty increase. So, we think, uh, for the year we'll have probably about, uh,
Speaker Change: % from, uh,
Robert Mehrabian: So. You know, there's a lot of moving parts, but that's the best we can do at this time.
Organic. But then we are also looking at effects effects and other things. So,
Speaker Change: you know, it's there's a lot of moving Parts but that's the best we can do at this time.
Operator: Thank you, I appreciate that.
Gregory Konrad: And then maybe just to dig into industrial and scientific vision a bit, I think you called out the book DeVille was 1.2 in the quarter.
George Bobb: And, you know, I appreciate some of the short cycle commentary, but any additional color and kind of what you're seeing in that business, either from an end market perspective, and how you're kind of thinking about the outlook for the So why don't I ask George to address that one too. Yeah, sure. So in that part of the business, the industrial and scientific vision, you know, what we saw in Q2 is the machine vision cameras business had year over year growth in applications like semiconductor mask and wafer inspection. The machine vision sensors business was down year-over-year on sales, but had an orders uptick year-over-year.
Speaker Change: Thank you. I I appreciate that and then maybe just to to dig into industrial and scientific Vision a bit. I think you called out the the book to bill was 1.2 in the quarter and, you know, appreciate some of the, the short cycle commentary, but any additional color and and kind of what you're seeing in that business. Either from an End Market perspective and and how you're kind of thinking about the outlook for the
Speaker Change: Sure. So why don't I uh ask George to address that 1 too?
George: Yeah, sure. So in that part of the business, the, the industrial scientific Vision. You know what we saw in Q2 is the Machine Vision cameras business, I had year-over-year growth in applications, like semiconductor mask and wafer inspection.
George Bobb: So both machine vision cameras, machine vision sensors had increases in orders year-over-year. So as you mentioned, overall book-to-bill was 1.2. We still think that business for the full year is relatively flat, but I think we're encouraged by, you know, some of those order trends that we've seen. And as we mentioned before, George and even before George, we took costs out. And so we've kind of stabilized, we feel we've stabilized that business to a revenue stream that is lower than it used to be. So now we can focus on improving the market.
Uh, the Machine Vision sensors business was down year year on sales but had an orders uptick year-over-year. So both Machine Vision cameras Machine Vision sensors had increases in orders year over year. So as you mentioned overall book to bill was 1.2, we still think that business for the full year so relatively flat, but I think we're encouraged by, you know, some of those order trends that we saw in Q2
George: And then as uh we mentioned before uh George and even before George, we took cost out. And so uh we've kind of stabilized. We feel we've stabilized that business
George Bobb: As we've done in other businesses, George, you did that in Marina, Senegal. That's right, I would say, you know, we run the same playbook always, right, which is, we focus on getting the cost structure, right, and growing, growing.
To a revenue stream that is lower than it used to be. Uh, so now we can focus on improving the margins.
George: As we've done in other businesses. Uh George you did that in uh Marina as an example. That's right. I would say you know we run the same Playbook always right? Which is uh we focus on getting the call structure, right? And grow growing from there.
Robert Mehrabian: And then maybe just sneak in one last one. I mean, you gave a lot of positive defense commentary. I mean, if we think across the businesses, you know, can you give some color on on what overall defense was up and, and how maybe international contributed to that, just given some of the positive commentary? Yeah. There are two parts and I think that's a really relevant question at this point. We have U.S. Government Defense and we have foreign government. The U.S. government defense improved 12.5% year over year. and it was primarily organic, primarily. Foreign government also improved.
Speaker Change: And then maybe just sneak in 1 last 1. I mean, you gave a lot of positive defense commentary. I mean if we think uh, across the the businesses, you know, can you give some color on on what overall defense was up and and how maybe International contributed to that just giving some of the positive commentary?
George: Yeah. Um,
George: There are 2 parts and I think Dr. Really relevant question at this point? We have
George: US Government defense.
George: And we have foreign government defense.
Uh, the US government defense.
George: Improved 12 and a half percent year-over-year.
George: And it was primarily organic primarily.
Robert Mehrabian: and over 15%. And there's a very, very good reason for that. Our defense portfolio. is spread across different countries. and different products. We have a very strong presence in Europe. For example, our very well known NanoZone. are not made in the US, they're made in Europe. On the other hand, some of our other drones. are made in Canada and some are made in the U.S. So when we look at growth, we look at Europe where defense spending is increasing, we have a nice footprint of manufacturing facilities across Europe. And as you well know, in-country production is the insourcing is a key.
George: Uh, foreign government also improved.
George: And over 15%, and there's a bit of very good reason for that.
George: Our Defence portfolio.
George: Is spread across different countries.
George: And different products.
George: We have a very strong presence in Europe.
George: For example, are very well known Nano drones.
Speaker Change: Are not made in the US. They're made in Europe.
George: On the other hand.
Some of our other.
George: Drones.
George: Are made in Canada and some are made in the US.
George: So when we look at growth, we look at Europe where defense spending is increasing, we have a nice footprint of manufacturing facilities across Europe.
George: and as you well know,
George: Uh, in country.
Robert Mehrabian: So if you already have an existing footprint, that's really good. The other thing is that. Everybody's talking about Unmanned. Yes.
George: Production is be, insourcing, is a key. So if you already have an existing footprint, that's really good. The other thing is that
Robert Mehrabian: Well, unmanned systems are not new to Teledyne, but we built our first unmanned drones during the Vietnam War. We built 5,000 firebeats that were used as targets and intelligence gathering. Unfortunately, when we got our divorce from Allegheny. They sold our best drone business, which was the Global Hawk. They sold it for $155 million to North And so. That business just went away. And it's only come back because of FLIR. But FLIR has a very strong portfolio of drones. both very small nano drones and others. But the other part that we are enjoying is that in the First 20 years of our history, new history.
Speaker Change: Everybody is talking about unmatched? Yes,
well, unmanned systems are not new to teladi like we built our first and man drone drones during the Vietnam war, we built 5,000 Firebase that were used as targets and intelligence gathering
Speaker Change: unfortunately, when we got our divorce from alagani,
Speaker Change: they sold our best drone business, which was the global hawk, they sold it for 155 million dollars to nurture.
Speaker Change: And so,
It's only come back because of flair.
Speaker Change: But Flair has a very strong portfolio of drones.
Speaker Change: Uh, both very small Nano drones and others. But the other part that we are enjoying is that in the
Robert Mehrabian: We got. Unmanned vehicles, we bought 21 companies, underwater companies, marine companies. And we have underwater unmanned vehicles that are equal to as many as we sell that are above water. And finally, the issue on drones is low cost. The lower the cost, the better. And we are fortunate, because of FLIR, that we can supply sensors, EOIR sensors, both for our drones, as well as other people's drones. And we're happy to sell people sensors. That's a big market for us. So the combination of being the company in infrared, having infrared and visible sensors and packaging them for our drones and selling them for other people's drones has put us in a nice place in this environment.
First, 20 years of our history, new history.
Speaker Change: We got.
Speaker Change: Unmanned Vehicles, we bought 21 companies, underwater companies Marine bunk company and we have underwater unmanned vehicles that are equal to as many as we sell that are above water. And finally, the issue on drones is low cost.
Speaker Change: and,
Speaker Change: The lower the cost, the better.
And we are fortunate because of Flesh that we can supply sensors, your IR sensors, both for our drones, as well as other people's drones.
Speaker Change: And we're happy to sell people sensors, that's a big market for us. So the combination of being the company in infrared, having
Robert Mehrabian: I know that's a very long answer to a short question, but I think the context is important. Drones are nothing new to Teledyne.
Speaker Change: Infrared and visible sensors, and packaging them for our drawers and selling them for other people's. Drones is put us in a nice place in this environment. I, I know that's a very long answer to a short question, but I think the context is important. Drones are nothing new to tan.
Operator: That was great. Thank you.
Speaker Change: That was great. Thank you.
Noah Poponak: Moving on to our next question, Noah Poponak with Goldman Sachs. Hey, good morning, everyone. Morning, Noah.
Noah Papaak: Moving on to our next question. Noah papaak with Goldman Sachs.
Noah Papaak: Hey, good morning, everyone.
Speaker Change: Good morning, Noah.
Noah Poponak: Do you guys have growth in orders versus growth in revenue or a book-to-bill for the first half of the year in what you would call broadly defined short cycle or in machine vision and instrumentation? Yeah. I think in instrumentation. which would be short-cycled, except for parts of marine NOAA that are defense-related. which are underwater vehicles again. I think it's just above one, because in Q1 it was 1.04, in Q2 it's 0.97. So average is a little over one, let's say one. And that doesn't change much across the businesses. Environmental is a little healthier, surprisingly. TNN is healthy, but still just below one.
Speaker Change: do you guys have, um,
Speaker Change: Growth in orders versus growth in revenue or a booked a bill, for the first half of the year.
Speaker Change: In, in what you would call, broadly defined short cycle or in Machine Vision and instrumentation.
Speaker Change: In instrumentation.
Speaker Change: Uh, which would be short cycle except for parts of marine. Noah that are defense related.
Robert Mehrabian: And marine is obviously above one. On digital imaging, as George mentioned and I mentioned, we're kind of getting a little bit of an uptick in our DALSA E2V where we took some cost out and we had lower revenue. But Q1 was 1.02, Q2 is 1.23. We're cognizant of the fact that you get good book to build when your revenue is down, but nevertheless, it's way over one. And FLIR is really healthy over one. It's 1.17 Q1, 1.02 Q2. So average is way over one.
Speaker Change: Which are underwater Vehicles again. I think it's just above 1 because in q1 it was 1.04 in Q2 is 0.97. So average is a little over 1, let's say 1 and at that doesn't change much uh across the businesses environmental is a little healthier. Surprisingly uh, tnm is healthy, but still just below 1 and Marine is obviously above 1.
Speaker Change: On digital imaging as uh uh George mentioned. And I mentioned uh we're getting a uh we're kind of getting a little bit of an uptick in our Dulce to we where we had uh we took some uh cost out and we had lower uh Revenue but you know, q1 was 1.02 to 22 is 1.23.
Robert Mehrabian: We feel good about those businesses right now. Okay. Yeah, I mean, you know, we're all gonna, we're all thinking about the same thing here with the BACF growth guide. And I recognize the pull forward you're mentioning, but 15 to 20 million is 1% of the revenue in a quarter. So if you had the acceleration to the 6% organic growth in a quarter. And you're saying 3Q and 4Q are 1 and 1.
Speaker Change: Uh, we cognizant of the fact that, you know, you get good book to build with your revenue is down. But nevertheless, it's way over 1 and 3 is really healthy everyone. It's 1.17 q1 1.22 Q2. So, average is way over 1. We feel good about those businesses right now.
Speaker Change: Okay. Yeah, I mean, you know, we're all going to we're all thinking about the same thing here, with the back half growth guide, um, and I recognize the pool forward, you're mentioning but 15 to 20 million is 1% of the revenue in the quarter.
Speaker Change: so, if you, if you had the acceleration to the 6% organic growth in the quarter,
Robert Mehrabian: You're sort of saying what was 6 and 1 is 5 and 2, so you're still, you know, adjusted for the pull forward, you're still projecting a not insignificant decel in total organic revenue growth when the long cycles grow in 5 to 7 and you're telling us the short cycle is getting better. I guess is the short cycle meet like, I guess if instrumentation book to bill is still below one, and you've only seen a short window of digital imaging orders getting better. plus there's just a lot happening in the macro.
Speaker Change: Um and you're saying, 3 q and 4 q are are 1 and 1, you're sort of saying what what was 6 and 1 should is 5 and 2.
Speaker Change: So you're still, you know, adjusted for the pool for, you're still projecting.
Speaker Change: A a not insignificant Dell in total organic Revenue growth when when the long cycle is growing 5 to 7 and you're and you're telling us the short cycle is getting better.
Speaker Change: Um, I guess exactly is is the short cycle me like, I guess of instrumentation booked. A bill is still below 1.
And you've only seen a short window of digital imaging orders getting better.
Robert Mehrabian: I mean, I guess I'm trying to get at how much of what you're saying about 3Q is a very bottom-up plan versus you guys said, hey, given all those mixed inputs and we need a little more time to feel good about short cycle, let's just call the third quarter flat sequentially and hope to beat it and see what the indicators are in three months. Yeah, no, exactly. Well, in the next three days, starting right after this meeting, we go into operations reviews with all of our businesses across the globe. And they all come in here.
Speaker Change: versus you guys said, hey, given all those mixed inputs and
We need a little more time to feel good about short cycle. Let's just call the third quarter, flat sequentially and and hope to beat it and and see what the indicators are in 3 months.
Robert Mehrabian: And what we got to do is, George and I have to sort through that they don't sandbag us, you know, people have a tendency to be cautious. And we got to challenge him without getting him to become too effervescent. So it's a balance. I'm hoping that we get some of these pull-ins in Q3 and Q4, right? I mean, as long as this whole international trade is volatile, who knows?
Speaker Change: Yeah, no. Exactly. Well in the next 3 days, starting right after this meeting, we going into operations reviews with all of our businesses, across the globe and they all come in here. And what we got to do, is George and I have to sort through that, they don't send baggage, you know, people have a tendency to be cautious and we got to challenge him without getting him to become too efficient. So it's a balance. I'm hoping that, uh, uh, we'll get some of these pulleys in Q3 and Q4, right? I mean, it's long as this whole international trade is volatile.
Robert Mehrabian: Yeah, I thought I thought volatile trade was causing push outs, not pull ins. So I wonder if you guys aren't telling you that. The reason I say that is it's both, if people think tariffs are going to go up in a certain area from a sales perspective, then they might like to get their orders in and get under the tariff. On the other hand, it could be the reverse if tariffs are high and they think they're going to go down. Right now, you know, it's so uncertain. Every day you pick up the paper, no, today's Japan 15 percent, somebody else is at 18 percent.
Speaker Change: Who knows?
Speaker Change: Yeah, I thought I thought volatile trade was causing push outs not pull-ins
Speaker Change: uh, so I I wonder if you guys aren't telling you that the reason I
Speaker Change: say that is, it's both.
Tariffs are going to go.
Speaker Change: In a certain area.
Speaker Change: from a sales perspective, then they might like to get their orders in and get under the tariffs
Robert Mehrabian: So we're very cautious and we're looking at that just like you are.
Operator: Okay, I get it.
Operator: Fair enough.
Operator: Could you spend another minute on the digital imaging margins and what you're thinking happens in the back half? And you've spoken to your medium term framework, just given those stepped back a little bit in the quarter. Yeah, Noah, here, again, there's a tail of two CDs. In FLIR, Margins have continuously increased. For example, in failure defense, when we acquired the business, our margins were more like just below 15%. Today, they're over 20% over a three year period. That's a pretty healthy improvement. Clear margins by and large have improved. Now, the flip side is because of the downturn in our camera and sensor, especially sensor business.
Speaker Change: On the other hand, they they could be the reverse if tariffs are high and they think they're going to go down right now. You know it's so uncertain every day. You pick up the paper not today's Japan 15% uh somebody else is at 18% so we're very close and we look at that just like you are. Uh, yeah. Okay. I get it. Um, fair enough, could you spend another minute on the digital imaging margins? Um and and what you're thinking happens in the back half and you've spoken to your medium-term framework. Um, just given those stepped back, a little bit in the quarter.
Yeah.
Speaker Change: Uh, no.
Speaker Change: when uh, Flair
Uh margins have continuously increased for example in player defense. When we acquired the business our margins were more like just below 15%
Speaker Change: Today, there are over 20% over the 3 year, period. That's a pretty healthy Improvement.
Speaker Change: Clear. Margins by and large have improved.
Speaker Change: uh,
Noah Poponak: The margins in the AUSA-E2B have gone down. Now overall, together If you look at, and by the way, we also have, George mentioned, we have some charges we took in Q2 to kind of right-size the business. So the margins, if you look at, I'll say to the year over year, they've gone down 100 basis points, but I would attribute most of that to the cost of. flip side. Player margins are as high as 24.2% in Q2 of this year, and they've gone up about 30 basis points. So when you look at the overall digital imaging, even with 100 basis points done in DAL-C2B, digital imaging as a whole, even with the cost out, is only done 10 basis points, or flat.
now the flip side is because of the downturn in our camera and sensor specially sensor business, the margins in the outside to we have gone down
Speaker Change: Now, overall together.
if you look at uh uh and by the way, we also as uh, uh,
George: George mentioned, we have some charges we took in Q2 to kind of rightsize the business.
George: So the margins, if you look at those say to be year-over-year,
George: Basis points, but I would attribute, most of that to the cost out.
George: Flip side.
George: Clear margins are as high as 24.2% in Q2 of this year and they've gone up about 30 basis points. So, when you look at the overall Digital Imaging, even with the 100 basis points, down in digit, in the adults A2B,
Robert Mehrabian: And that to me is encouraging, because for a long time, everybody was saying, gee, what are you doing with FLIR? Well, FLIR is doing really well, it's carrying the day.
George: Digital Imaging as a whole, even with the cost of is only done 10 basis points or flat.
Noah Poponak: And as soon as we straighten out, which we are, George straightens out with his people, the DASA A2B picture, we're going to be fine. Interesting.
George: And that to me is encouraging because for a long time, everybody was saying, gee, what are you doing with Flip? Flip is doing really well, is carrying the day and as soon as we straighten out which we are George straightens out with these people, the do say to the picture, we're going to be fine.
Noah Poponak: Okay, that's super helpful.
Noah Poponak: What did you take in charges in millions of dollars in the quarter? About 5.3 5.3, the way I look at it, every 600,000 is a penny. Okay. That's about nice. Eight, nice. Okay, got it, thank you.
Speaker Change: Interesting. Okay, that's super helpful. What? What did you take in charge of in millions of dollars in the quarter?
Speaker Change: 600,000 is a penny.
Speaker Change: Okay, it's about 9 Cent, 89 cents.
Speaker Change: Okay, got it.
Operator: Thank you, Noah.
Thank you.
Operator: By the way, thank you for sending those free prepared questions. It's very helpful. Oh, good. I'm glad to hear that. We'll keep doing it. Thanks again. Thank you.
Speaker Change: Thank you, Noah. By the way, thank you for sending those 3. Prepare questions. It's very helpful to me.
Oh good, I'm glad to hear that. We'll keep doing it.
Thanks again.
Jim Ricchiuti: Our next question comes from Jim Ricchiuti with Needham & Company. Thanks. Good morning.
Thank you. Our next question comes from Jim Richie, with any company.
Jim Ricchiuti: Wondering, just given the moving parts in terms of the overall revenue outlook, the sales outlook for Q3 and Q4, I'm wondering if your expectations for margin improvement for the full year have changed at all, I think, versus your earlier expectation, correct me if I'm wrong, you were talking, I think, about 60 basis points of operating margin improvement. Yeah, we're still there. We did that in Q2. We improved it 57 basis points not to nitpick. Right now we're at 55 for the year 5060 is a good number. George, what do you think? I think that's right.
Speaker Change: Uh, good morning, um, wondering. Just given the moving Parts. Um, in terms of the uh overall Revenue Outlook, the sales outlook for for Q3 and and Q4 I'm wondering if your expectations for margin Improvement, uh, for the full year, ha have changed at all. Um, I think versus your earlier expectation. Correct me if I'm wrong, you were talking, I think about 60 basis points of operating margin Improvement.
Robert Mehrabian: I think yeah. So that's it.
Speaker Change: Yeah, we're still there. We did that in Q2 we improved it 57 basis more it's not to nitpick right now we're at 55 for the year 5060 is a good number George. What do you think? No I think that's right. I think yeah.
Speaker Change: So that it is.
George Bobb: And, you know, looking at the instrumentation business, the marine portion of that business, the marine instrumentation business has generated strong growth, it seems like for the better part of a couple of years now. And I wanted to, if we could, maybe just, if you could talk a little bit about the drivers there. It's both, I think, both defense and commercial subs, is it sustainable at these, given what you're seeing?
Speaker Change: and um, you know what, looking at the instrumentation business, the the Marine
Speaker Change: Portion of that business. The Marine instrumentation business has has generated strong growth. Yeah, it seems like for the better part of a couple of years now and I wanted to if we could maybe just if you could talk a little bit about the drivers there, it's both I think both defense and Commercial Subs. Uh
Speaker Change: Is it sustainable at these? You know, given what you're seeing
George Bobb: I'm going to let George answer that from a sustainability perspective, there's two ways to look at it. One of them is the growth. Are you going to sustain a 15% growth going forward year in year out? The answer is no. Is it sustainable because it's at a high level? Yes. because we have really unique products.
um, I'm going to let George answer that. I promised sustainability perspective, there's 2 ways to look at it.
1 of them is the growth.
Speaker Change: Are you going to sustain a 15% growth going forward year in year out? The answer is no. Is it sustainable? Because it's at a high level? Yes.
George Bobb: George, you want to add to that? Yeah, I would just add, so the energy part of the business is about 40% of the marine business. We continue to see strong growth there in the subsea interconnects for oil production, for example, offshore streamers for geophysical surveys for oil and gas exploration. And we expect that to continue at least for the next few years, subject, of course, to oil prices. On the defense side of the business, that's probably, you know, give or take 30% of the marine business. What's driving that? Subsea unmanned vehicles, a lot of demand for unmanned vehicles globally, in particular.
George Bobb: And then we also have a nice submarine interconnect business there where we're on platforms like the Virginia and Columbia class submarine, and that business is doing well. So I think in that case on the defense side, certainly think that's sustainable given the overall environment geopolitically, particularly where we're selling vehicles into places like the Baltic Sea, the Black Sea, and certainly submarines are, you know, among the U.S.
Because we have really unique products. George, you want to add to that? Yeah, I would just add so the energy part of the business is about 40% of the Marine business. We've seen continued to see, you know, strong growth there in the subsea interconnects for oil production, for example, offshore, uh, streamers for geophysical, surveys for oil and gas exploration. Uh, and, and we expect that to continue at least, you know, for, for the next few years subject, of course, to oil prices, which we can't predict on the defense side of the business. That's probably, you know, give or take 30% of the Marine business, what's driving, that subk unmanned Vehicles, a lot of demand for unmanned Vehicles globally, uh, in particular and then we also have a nice, uh, submarine interconnects business there where we're on platforms, like the Virginia and Columbia class submarine.
Robert Mehrabian: Navy Last question, if I could just slip one other one in. It sounds like micropack margins were up. That's going well. Are you still thinking in terms of keyoptic being able to add about 15 cents to EPS this year? The answer is yes. Both in MicroPak and Keyoptik, as we look Q1, Q2, Q3, Q4, margins are consistently improving and projected to improve. That's our storybook, right?
Speaker Change: Uh, and and that business is doing well. So I, I think in in, in in, in that case, on the defense side, certainly think that's sustainable given the overall, uh, environment geopolitically particularly, where we're selling Vehicles into places like the Baltic Sea, the Black Sea and certainly submarines are, you know, among the US Navy's top priorities,
Speaker Change: Okay, last question. If I could just slip 1 other 1 in it sounds like micropack. Margins were off. That's going well. Are you still uh thinking in terms of key optic being able to add uh about 15 cents to the EPS this year?
The answer is yes.
Speaker Change: uh both in micropack and kiosk, as we look to 1 you took Q3 Q4
Speaker Change: Margins are consistently improving and projected to improve. That's that's our uh, story book, right?
Robert Mehrabian: My key optics turned out to be a really good acquisition. It's very interesting. There's a part of it that's in the US. which are energetic. etc. when you separate missiles. from what drives them. But then in Europe, especially in the UK, it's a lot of military applications, which are very closely tied to what FLIR makes. So what George has done is has the UK part report to GPEN, by the way, that's J-I-H, capital F-E-N, reports to GPEN Lee, who runs our FLIR defense. So she's integrating that into FLIR defense, even though we're reporting in a segment, doesn't matter.
Speaker Change: My my, my key Optics turned out to be a really good acquisition. Uh, it's very interesting. There's a part of it, that in the US
Speaker Change: Which are energetics.
Speaker Change: Etc, when you separate missiles,
Speaker Change: uh,
Speaker Change: from what drives him.
But then in Europe, especially in the UK, it's um a lot of military applications which are very closely tied to what Fleer makes.
Speaker Change: so, well George is done is has the
Speaker Change: UK part.
Speaker Change: Report to Gin by the way that's been J IH. Capital FM reports to gnv.
Robert Mehrabian: It's how you manage it and how you enjoy the fruits of having similar products, different customers. Keoptik makes products in Europe. We can sell those products now in the U.S. And of course, the opposite is true with Flickr. So there we go.
Speaker Change: Who runs our Fleet defense. So she's integrating that into Fleer defense even though we reporting in a segment doesn't matter, it's how you manage it and how you enjoy the fruits of uh having similar products, different customers, Copic mixed products in Europe,
Speaker Change: Uh, we can sell those products now in the US.
Speaker Change: And of course, uh, the opposite is true uh, with Fleer. So there we go.
Operator: Thank you.
Speaker Change: Thank you.
Jordan Lyonnais: Moving on to Jordan Lyonnais with Bank of America. Hey, good morning.
Nas: Nas, with Bank of America.
Nas: Hey, good morning.
Jordan Lyonnais: Could you guys cover so on the drone exposure overall, how are you thinking about the opportunities? Black Hornet was added to the blue UAS list. But is it the driver for you guys? It's really just the camera systems you'll sell to everybody versus your own drone products? Yeah, I think you got it. I think We sell it to our own products. And our drone products are obviously not just the Able to put our sensors in but we're developing new drones all the time.
Could you guys cover? So,
Speaker Change: On the Drone, exposure. Overall, how are you thinking about the opportunities? Uh,
Speaker Change: Black hornet was added to the, uh, blue uas list. But is it the driver for you guys is really just this the camera systems you'll sell to everybody versus, uh, your own drone products.
Yeah. Um, I think you've got it. I think, uh,
Speaker Change: We sell it to our Dome products.
Speaker Change: and our drone products, are obviously not just uh the uh,
Robert Mehrabian: The latest drone that's going to go into pre-production is a weaponized drone. We have very competitive drone there called the R1. And the other thing is that we have unique drones in the small nanodrones, which you've seen, the Black Hornets, which are growing in revenue and in adaption by many countries.
Speaker Change: Ability to put our sensors in, but we're developing new drones all the time. The latest drone that's going to go into pre-production is a weaponized drone.
Speaker Change: We have very competitive drone there called the R1.
Speaker Change: Um, and the others. The other thing is that
Robert Mehrabian: But then on the sensor side, we have this large business in Santa Barbara. that makes cooled and uncooled infrared and infrared plus visible sensors. I will sell them to anybody. We're not unique. We're not going to just sell it to our own.
Speaker Change: we have unique drones in the small, uh, Nano drones which you've seen the black hornets, which are growing in revenue, and in adaption by many countries, but then in the sensor side, we have this very large business in Santa Barbara.
Robert Mehrabian: I'm actually we make a lot more revenue selling it to other people, but $200 million worth of product plus that they make, they also enable another $800 million of revenue across Teledyne by the census, and I'm sure other people are enjoying the same thing. Basically, you want to make sensors for other people. And it's very simple. The math is really simple. The larger the production floor You spread your cost and development across a broader and more sales you have. The better your margins consequently, because you have more. So we'll sell it to anybody. And we do actually, we sell to competitors, we sell to people that are not competitors.
That makes cooled and uncooled infrared and infrared plus, uh, visible sensors. I will sell them to anybody. We're not unique, we're not going to just sell it to our own. I'm actually make a lot more, uh, Revenue selling it to other people, but
Speaker Change: Uh out of 200 million dollars worth of product plus that they make. They also enable another 800 million dollars of Revenue across peladon by the sensors. And I'm sure other people are enjoying the same thing.
Speaker Change: Basically you want to make sense is for other people and it's very simple. The math is really simple. The larger, the production floor,
Speaker Change: you spread your cost and Development Across a broader.
Speaker Change: Sales Channel.
Speaker Change: and uh, more uh sales you have
Robert Mehrabian: And we sell to both defense companies and non defense.
Speaker Change: The better your margins consequently because you have more so we'll sell it to anybody and we do actually we sell to competitors, we sell 2 people. Um, that are not competitors and we sell to both defense companies and non-defense companies.
Robert Mehrabian: And then for the one big beautiful bill that passed, are there any changes that we should consider for the RD tax changes or any other new programs that you guys see a lot of runway from? Yeah, there are two. One has to do with the writing down the R&D with Obviously, it's good if you can accelerate. But the other part is really the cash. tax portion. And we think that would be lower in the second half of the year. by as much as $30 million. So flip side. are on the credit. You can exsolidate.
Got it. Okay and then uh for the 1, big beautiful bell that passed
are there any changes that we should consider for the Rd tax uh changes or any other new programs? Uh that you guys see a lot of Runway from
Speaker Change: Yeah. Uh, there are 2.
Speaker Change: 1 has to do with.
the writing down the R&D, which
Uh, obviously is good if you can accelerate it.
But the other part is really the cache tax portion.
Speaker Change: And we think that would be lower in the second half of the year.
Speaker Change: By, as much as 30 million dollars. So,
Speaker Change: Flip sides.
Robert Mehrabian: The other side, you're expected to pay 30 million more in taxes than we're expecting now to our calculations show. And we're obviously very busy trying to figure out all the R&D expenditures that we have across. It's been good from that perspective.
Speaker Change: R&D credits, you can accelerate
Speaker Change: The other side, the expected to pay 30 million more in taxes than we expecting now to our calculations show.
Speaker Change: And we'd obviously very busy trying to figure out all the R&D expenditures that we have across the company.
Speaker Change: It's been good from that perspective.
Operator: Thank you.
Speaker Change: Got it. Thank you.
Jonathan Siegman: Next question comes from Jonathan Siegman with Stiefel. Good morning. Thanks for taking my question. Of course. On Golden Dome, there seems to be some funding coming through to that program. Can you talk a little bit about which Teledyne products have the most relevance to? And are you already engaging with some of the industry partners? And just give a sense of how big of an opportunity that could be for the company. Thank you.
Speaker Change: Next question comes from Jonathan Sigmund with stifel.
Jonathan Sigmund: Good morning. Thanks for taking my question.
Jonathan Sigmund: On golden dome. There seems to be some funding uh coming through to that program. Can you talk a little bit about which Tuan products have the the most relevance to? And are you already engaging with some of the industry partners and just give a sense of how big of an opportunity that could be for the company? Thank you.
George Bobb: It's a little too early to kind of be too specific. But we have a lot of activity there, coordinated activity.
George Bobb: I'm going to let George answer. Sure, so the One Big Beautiful Bill Act did include some funding to advance the Golden Dome concept. In general, we've got a large presence in space-based imaging and electronic subsystems that go into things like missile tracking. So we would expect, given our presence on, for example, the Space Development Agency Tronch programs, overhead persistence infrared programs, things like that, that we'd have Yeah, we do. We're trying to coordinate our response. We're getting some requests for early requests for proposals from some of our customers. And we're positively inclined towards that. Now, historically, We have participated in the defense systems that they use in Middle East that Israel uses.
Jonathan Sigmund: Advanced, the golden dome concept. Uh, in general, uh, we've got, you know, large presence in space-based imaging and electronic subsystems that go into things like missile tracking. Uh, so we would expect given our, you know, given our presence on. For example, the space development agency, trash programs, overhead persistence infrared programs, things like that. Uh that we'd have opportunities in the mostly in the space space sensing but also some of the electronic subsystems
Speaker Change: Yeah, and we do, we're trying to coordinate our response with getting some requests for early requests for proposals from some of our customers. Um,
Speaker Change: and with with, with, with positively inclined towards that now historically,
Robert Mehrabian: But this is very different, obviously. It's bigger, it's broader, it's more space-based. And because we have a pretty rich heritage of space imaging, both in science and defense, by the way, they overlap. And as George mentioned, we play in all of those domains. And you're going to have to use those if you're going to have any kind of a broad. looking down. I don't know if that answered your question. Thank you.
Speaker Change: We have participated in the the, uh, defense systems that they use in Middle East that Israel uses. Uh, but this is very different, obviously, it's bigger, it's broader. It's more space-based and because we have a pretty rich Heritage of space Imaging both in science and defense by the way they overlap. And, as George mentioned, we play in all of those domains. And you, you're going to have to use those if you're going to have any kind of a a broad, uh,
Speaker Change: Defense system.
Looking down.
Speaker Change: I don't know if that answered your question.
Operator: It's very helpful.
Robert Mehrabian: And on the share buyback authorization, I'm just curious whether we should be taking that as an indicator that the pipeline of activity is slowing down or whether you're starting to see value in the stock, if you can maybe expand on that, that'd be helpful. Sure. It's again, a tale of two cities, right? Last time we bought stock, the stock was at $400, now it's over $500. So you ask yourself, is that a wise thing to do?
Speaker Change: Thank you. It's very helpful and out on the share buyback, authorization. I'm just curious. What whether we should be taking that as an indicator that uh, the pipeline of activity is slowing down or whether you're starting to see value in the stock. If you can maybe expand on that, that'd be helpful.
Robert Mehrabian: I think the most important thing is to have the optionality on the table. In terms of Acquisition Availability. There are available acquisitions. But they're insane in price. People are paying 19, 20 times EBDA for products for businesses that you got to go and do three, four years of hard, thick We, one case as an example, without mentioning the exact nature of it, we did a price which we thought was a stretch for us. Somebody bid a price 30% higher. I just blew us out of the water.
Speaker Change: Sure. It's a it's again payoff to see, right? Last time we bought stock was the stock was at $100 and now it's over 500. So you ask yourself. Uh, is that a wise thing to do? I think, the most important thing is to have the optionality on the table.
Speaker Change: Uh,
Speaker Change: in terms of,
Speaker Change: Acquisition availability. There are available acquisitions.
Speaker Change: But they're insane in prices.
Speaker Change: People are paying 1920 times ebda for products for businesses that you got to go and do 3, 4 years of hard fixing.
Speaker Change: Are we 1 case, as an example without mentioning it, the exact nature of it, we did a price which we thought was a stretch for us.
And somebody did a price 30%, higher.
Robert Mehrabian: So There are acquisitions, but the insanity of the price until it kind of moderates, we're going to sit on the sideline. We may buy our stock back, if that's the best value. We would also, you know, we look at, you know, we have all fixed debt going forward. The longest fixed debt, the cost to us in terms of is about 5%. And right now we're earning We're going to sit on the sideline. just north of 4%. So you look at that and you say, what do you do? Sit on eight, $900 million of cash, or do you use some of that?
Speaker Change: I just blew us out of the water, so
Speaker Change: there are Acquisitions, but the insanity of the price until it kind of moderates. We're going to sit on the side line, we met, or buy our stock back.
Robert Mehrabian: Not all of it, some of that to redeem some of the bonds. The good thing is our debt to EBITDA ratio is 1.6. If we do nothing, it'll go down to 0.5 next year, in the next year. So it's a nice place to be. We may buy or stop. We may buy businesses if sanity prevails. Thank you very much.
Speaker Change: If that's the best value. We we would also, you know, if we look at, you know, we have all fixed debt going forward, the longer fixed debt, the cost to us in terms of its about 5%. And right now, we're earning just north of 4%. So you look at that and you say, what do you do? Sit on 8 900 million dollars of cash or do you use some of that? Not all of it, some of that to redeem some of the bonds,
Uh, the good thing is uh, our debt ratio is 1.6. If we do nothing, you'll go down to 0.5 next year and the next year. So it's a nice place to be.
Speaker Change: We may buy our stock, we may buy businesses if, uh, sanity prevails.
Joseph Giordano: Thank you. We'll go next to Joe Giordano with T.D. Cohen. Hey, guys, thanks for taking my questions. Apologies if you said this in the beginning, I missed the very beginning of the call. But just relating to the pull forward, the potential there, I know it's not a huge number, but like, were you seeing like tangible reductions in orders in like early July that confirms something like this?
Thank you very much.
Speaker Change: You.
Speaker Change: We'll go next to Joe Giordano with TD Cohen.
Robert Mehrabian: Or is it more just like, something that you're just, you know, maybe worried about, but aren't seeing The answer is no, we didn't see it. We're just, you know, it's, it's... It's the cautious nature of Teledyne to kind of not be effervescent. We haven't seen it. I hope we won't see it, and I hope we can say next quarter that we pulled forward. But we haven't seen any of it. Yeah, okay. And then last quarter, you know, given all the controversy around tariffs, and we didn't know what was going on and raising prices, you guys were building in some kind of contingency on the demand side related to price actions you may have to take to combat.
Speaker Change: Hey guys, thanks for taking my questions. Um, hi Joe apologies. If you said this, in the beginning, I missed the very beginning of the call, but just relating to the pull forward, the potential there. I know, it's not a huge number but like, were you seeing like tangible reductions in order and like early July to confirm something like this? Or is it more just like
Speaker Change: Something that you're just, you know, maybe worried about but aren't seeing evidence of it.
Speaker Change: The answer is no, we didn't see it. We're just, you know, it's it's uh
it's that cautious nature of, uh,
Speaker Change: The next quarter that we pulled forward uh, but we haven't seen any evidence now.
Speaker Change: Got it. Okay. Um,
Robert Mehrabian: Now, as tariffs have de-escalated, have you removed any of that kind of contingency from the guide? You know, now that we're three months further along, and the tariffs are coming in at lower rates? Yeah, there are two parts to this, as you will know, one of them is on the sales side. And the other part is on the cost. Let me deal with the first with the sales side. The good thing about Teledyne, in terms of tariffs, is that 82% of our revenue on the sales side come from U.S. based businesses that are selling to U.S.
Speaker Change: and then last quarter, you know, given all the controversy around tariffs and we didn't know what was going on and you know, raising prices you guys were building in some kind of contingency on the demand side related to, you know, price actions. You may have to take to combat. Now as tariffs of De escalated, um, have you removed any of that kind of contingency from the guide. Um, you know, now that we're 3 months further along and the tariffs are coming in at lower rates
Speaker Change: Yeah, there are 2 parts to this as you. Well know 1 of them is on the sales side and the other part is on the cost side.
Speaker Change: Let me deal with the First with the sales side.
Speaker Change: The good thing about Ted, If there is, in terms of tariffs, is that 82% of our revenue on the sales side.
Robert Mehrabian: based customers or international locations selling to international customers. So in that way, 82% of our product is under the tent and we don't worry that much about it. of the other 18% of the sales. Approximately 75% or 14% of the total 18 are US exports to international locations. That can have an effect. But Fortunately for us, only 2% of our sales are to China in that domain. Finally, 4% of our external sales are from Teledyne International location. to U.S.-based customers. where new tariffs may apply. But we have products that are extremely unique like Magnetron. for X-ray for cancer treatment, which are unique products.
Speaker Change: come from us-based businesses that are selling to us, best customers or
International locations, selling to International customers. So, in that way, 82% of our, uh, uh, product is under the 10th and we don't worry that much about it.
Of the other 18% of the sales.
Speaker Change: Approximately.
Speaker Change: 75% or 14% of the total 18 are US exports to International locations that can have an effect but
Speaker Change: Fortunately for us only 2% of our sales, are to China in that domain.
Speaker Change: Finally.
Speaker Change: 4% of our external sales are from tudeen, International locations to us-based customers where new tariffs May apply,
Speaker Change: But we have products that are extremely unique, like magnetrons.
Speaker Change: Or x-ray.
Robert Mehrabian: And we think that's not going to be affected much. Having said all of that, we'll see some impact, but it won't be very large.
Robert Mehrabian: On the cost side, that's a different story. We import about $700 million of materials. which enters our cost of goods. And if you assume tariffs are, let's say, 11%... That's $80 million. We can probably mitigate some of that by using US, Mexico, Canada, and the fact that we're doing US military DOD products. That leaves maybe $60 million in the cost, which is $15 million a quarter, which we have to make up with pricing. I don't know, that's as wholesome a picture as I can get. I guess what I'm getting is I think you guys were factoring in like every percent of price that you need to do will kind of like destroy demand to a certain Do you still feel that way?
Speaker Change: Uh, uh, for the cancer treatment, which are unique products and we think that's not going to be affected much. Having said, all of that, we'll see some impact, uh, but it won't be very large on the cost side. That's a different story.
Speaker Change: We import about 700 million dollars of materials.
Speaker Change: Uh,
Speaker Change: which enters our cost of good.
Speaker Change: and if you assume tariffs are, let's say 11%
Speaker Change: that's 80 million.
Speaker Change: we can probably mitigate some of that by using us Mexico Canada and the fact that we're doing US military DOD products
and,
That is maybe 60 million in the cost, which is 15 million a quarter, which we have to make up with price increases.
I don't know. That's as that's as wholesome a picture as I can give
Robert Mehrabian: And is that kind of, is that contingency still in the guide? No, the answer is no. We've become less cautious in that domain.
Speaker Change: I just what I'm getting is I I think I think you guys were factoring in like every percent of price that you need to do will kind of like destroy demand to a certain extent. Do you still feel that way? And is that kind of is that
Contingency still in the guide.
Speaker Change: No, the answer is no.
We become less cautious in that domain.
Robert Mehrabian: Okay, thank you. Thank you. We'll go next to Rob Jamieson with Vertical Research Partners. Hey guys, thanks for taking my question. Just a quick one, just to go back to your guidance on EPS, just can you walk us through a scenario and what would need to happen across the portfolio if you hit the high end of the guidance range or maybe even exceed it? What would need to happen? Uh, Teledyne's history would repeat itself. How's that? I think, no, I think, I think it all depends on our short cycle business, because we have a really good view on the long cycle.
Speaker Change: Okay, thank you.
Speaker Change: Thank you.
We'll go next to Rob Jameson with vertical research partners.
Hey guys, thanks for taking my question. Um, just a quick 1 just to go back to, um, the fully your guidance on EPS. Just can you walk us through a scenario and what would need to happen across the portfolio? If you to hit the high end of the guidance range, or maybe even exceed it, what would need to happen?
Speaker Change: Um, Ted history would repeat itself.
Speaker Change: As that.
George Bobb: You know, we're seeing growth in, as George mentioned, we're seeing growth in our test and measurement. We're seeing growth in our environmental, surprisingly. And if those hold up. will be fine. Great. And then just, can you talk a little bit more about the test and measurement business and performance during the quarter and your expectations for second half? I think last quarter, you called out that you saw strong Ethernet test sales, you know, and that's related to AI. Just curious, you know, if there are any additional areas of strength you saw during the quarter? Any additional color?
Speaker Change: Uh, I think, uh, yeah. No, I think, I think, uh, it all depends on our short cycle business, because we have a really good view on the long long, long cycle. Um, you know, we're seeing growth in, um, as George mentioned. We've seen growth, in our tests and measurements, we're seeing growth in our environmental, surprisingly
Speaker Change: uh,
Speaker Change: Will be fine.
Speaker Change: Great. Um, and then just, uh, can you talk a little bit more about the test and measurement, business and performance during the quarter and and your expectations for second half? Um, I think last quarter you had called out that you saw strong ethernet test sales, you know. And that's that's related to AI just curious. Um, you know, if there are any additional errors and strength you saw um during the quarter or any additional calls
George Bobb: I'll let George answer that, please. So we had about 5.5% organic growth in the test and measurement business in Q2. It was our third consecutive quarter of year-over-year growth. And fundamentally, the protocol sales drove most of that growth, but the oscilloscope sales were also kind of slightly higher. On the oscilloscope side, it's driven by some of the high-speed applications, also driven by some power and motor drives. Analyzers. And on the protocol side, yes, it's, you know, it's been driven by those network applications, you know, high speed communications, things like PCI Express. And so, you know, we continue to, again, that business is stabilized.
I'll let George answer that, please sure.
Speaker Change: So we had about 5 and a half percent. Uh, organic growth in the testing measurement business. In Q2, it was our third consecutive quarter of uh, year-over-year growth and fundamentally the protocol sales drove most of that growth, but the oscilloscope sales were also kind of
Speaker Change: Slightly higher, uh, on the oscilloscope side. It's, you know, driven by some of the high speed applications also driven by some power and motor Drive. Uh,
Analyzers. Um, and on the protocol side. Yes. It's you know, it's been driven by those Network applications, uh you know, high high speed communication, things like PCI Express.
George Bobb: We've seen nice consecutive growth in three quarters year over year. We still expect the business to be up kind of low single digits for the full year. And it's solid. Yeah, anything that increases traffic. requirements for larger storage capacity and anything to do with AI is of course just that. would benefit our protocol. Perfect. Thank you.
Speaker Change: Uh, and so you know we we continue to again, that business is stabilized. We've seen nice consecutive growth and and and 3 quarters year over year. We still expect the business to be up, kind of low, single digits, for the full year.
Speaker Change: And uh, it's uh, solid. Yeah.
Speaker Change: yeah, anything that uh, increases traffic
Speaker Change: Increases uh, requirements for larger storage capacity.
Speaker Change: and anything to do with AI is, of course, just that
Speaker Change: would benefit our protocol businesses.
Speaker Change: Perfect, thank you.
Operator: So Carrie, how are we doing? This actually does now conclude our question and answer session. I would like to turn the floor back over to our speakers for closing comments.
Speaker Change: So Terry, how are we doing?
Speaker Change: This actually does now conclude our question and answer session. I would like to turn the floor back over to our speakers for closing comments.
Jason VanWees: So, okay, let's go to Jason then. Again, thanks everyone for joining us today, and if you have follow-up questions, feel free to call me at the number on the earnings release. Kerry, if you'd give the replay information over the call, the webcast, we'd appreciate it. Goodbye, everyone. Thank you, ladies and gentlemen. Thank you for your participation. This does conclude today's teleconference. You may disconnect your lines and have a wonderful day.
Jason: Uh okay let's go to Jason then again, thanks everyone for for joining us today. And if you have follow-up questions, feel free to call me at the number on the earnings release. Um, okay. If you give the replay information over the call uh the webcast. We'd appreciate it. Goodbye everyone. Thank you.
Speaker Change: Thank you, ladies and gentlemen, thank you for participation. This does conclude today's teleconference. You may disconnect your lines and have a wonderful day.