Teledyne Technologies Q4 2025 Teledyne Technologies Inc Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 Teledyne Technologies Inc Earnings Call
Good morning everyone and thank you for joining here. In this call, this is Jason, bennu Vice chairman and I'd like to welcome everyone to our fourth quarter and full year, earnings release conference call and we released our earnings earlier this morning before the market opened
Joining me today until its executive. Chairman Robert mamian president and CEO, George Bob EVP, and CFO Steve Blackwood and Melanie. Civic EVP. General Council Chief compliance officer and secretary,
After remarks by Robert George and Steve, who will last for your question. But of course, before we get started attorneys, have reminded me to tell you that all 4 were looking stages. Made this morning are subject to various assumptions, risk factors and caveats as noted in the earnings release and are periodic SEC filings. And of course, actual results May differ materially.
In order to avoid potential selective disclosures, this call is simultaneously being webcast and a replay both via webcast and dial and will be available for approximately 1 month.
Here is Roberts.
Thank you, Jason.
We conclude the 2025 with the largest quarterly orders sales and non-gaap earnings. And as well as operating margin in the company's history. Consequently
Speaker #1: Welcome to the Teledyne Fourth Quarter Earnings Conference Call. Here is our first speaker, Mr. Jason VanWees.
Jason VanWees: Welcome to the Teledyne Q4 earnings conference call. Here is our first speaker, Mr. Jason VanWees.
Operator: Welcome to the Teledyne Q4 earnings conference call. Here is our first speaker, Mr. Jason VanWees.
mistake about 2026, both due to the performance of our businesses in 2025, as well as the new leadership in place with George Bob as CEO and multiple senior Executives with added responsibilities in our business segments,
Speaker #2: Good morning, everyone, and thank you for joining the earnings call. This is Jason VanWees, Vice Chairman, and I'd like to welcome everyone to our fourth quarter and full year earnings release conference call.
Stephen Blackwood: Good morning, everyone, and thank you for joining the earnings call. This is Jason VanWees, Vice Chairman, and I'd like to welcome everyone to our Q4 and QE earnings release conference call. We released our earnings earlier this morning before the market opened. 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 Secretary. After remarks by Robert, George, and Steve, who will ask your questions, but of course, before we get started, attorneys have reminded me to tell you that all forward-looking statements made this morning are subject to various assumptions, risk factors, and caveats as noted in the earnings release and/or periodic SEC filings. Of course, actual results may differ materially. In order to avoid potential selective disclosures, this call is simultaneously being webcast and a replay.
Jason VanWees: Good morning, everyone, and thank you for joining the earnings call. This is Jason VanWees, Vice Chairman, and I'd like to welcome everyone to our Q4 and QE earnings release conference call. We released our earnings earlier this morning before the market opened. 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 Secretary.
Getting back to 2025.
Speaker #2: And we released our earnings earlier this morning before the market opened. Joining me today are Teledyne's Executive Chairman, Robert Mehrabian; President and CEO, George Bobb; EVP and CFO, Stephen Blackwood; and Melanie Sevik, EVP, General Counsel, Chief Compliance Officer, and Secretary.
Fourth quarter sales increased 7.3% from last year while non-gaap earnings increased 14.1%.
For the full year.
Sales, increased 7.9% and non-gaap earnings increased 11.5%.
Throughout tudeen.
After remarks by Robert, George, and Steve, who will ask your questions, but of course, before we get started, attorneys have reminded me to tell you that all forward-looking statements made this morning are subject to various assumptions, risk factors, and caveats as noted in the earnings release and/or periodic SEC filings. Of course, actual results may differ materially. In order to avoid potential selective disclosures, this call is simultaneously being webcast and a replay.
Speaker #2: After remarks by Robert, George, and Steve for the last few questions—but of course, before we get started—attorneys have reminded me to tell you that all forward-looking statements made this morning are subject to various assumptions, risk factors, and caveats, as noted in the earnings release and our periodic SEC filings.
Our defense businesses remained healthy, and our short cycle commercial businesses continued to recover with most product families, increasing either, sequentially or year-over-year.
Speaker #2: And of course, actual results may differ materially. In order to avoid potential selective disclosures, this call is simultaneously being webcast and a replay. Both via webcast and dial-in will be available for approximately one month.
Stephen Blackwood: Both via webcast and dial-in will be available for approximately one month. Here is Robert.
Both via webcast and dial-in will be available for approximately one month. Here is Robert.
Speaker #2: Here is
Speaker #2: Robert. Thank you,
Robert Mehrabian: Thank you, Jason. We concluded 2025 with the largest quarterly orders, sales, and non-GAAP earnings, as well as operating margin in the company's history. Consequently, I'm optimistic about 2026, both due to the performance of our businesses in 2025, as well as the new leadership in place with George Bobb as CEO and multiple senior executives with added responsibilities in our business segments. Getting back to 2025, Q4 sales increased 7.3% from last year, while non-GAAP earnings increased 14.1%. For the full year, sales increased 7.9%, and non-GAAP earnings increased 11.5%. Throughout Teledyne, our defense businesses remained healthy, and our short-cycle commercial businesses continued to recover, with most product families increasing either sequentially or year over year. In digital imaging, Teledyne FLIR performed very well, with particular strength in unmanned and other defense surveillance systems, while within marine instrumentation, we achieved record sales of autonomous underwater vehicles.
Robert Mehrabian: Thank you, Jason. We concluded 2025 with the largest quarterly orders, sales, and non-GAAP earnings, as well as operating margin in the company's history. Consequently, I'm optimistic about 2026, both due to the performance of our businesses in 2025, as well as the new leadership in place with George Bobb as CEO and multiple senior executives with added responsibilities in our business segments. Getting back to 2025, Q4 sales increased 7.3% from last year, while non-GAAP earnings increased 14.1%.
Speaker #3: Jason. We conclude the 2025 with the largest quarterly orders sales and non-GAAP earnings and as well as operating margin in the company's history. Consequently, I'm optimistic about 2026, both due to the performance of our businesses in 2025 as well as the new leadership in place, with George Bobb as CEO and multiple senior executives with added responsibilities in our business segments.
In digital imaging, tudeen Fleer performed very well with particular strength in unmanned and others defense, surveillance systems while within Marine instrumentation. We, we achieved record sales of autonomous underwater vehicles.
In terms of capital deployment.
25 255 was our second largest deer in history with over 850 million dollars spent on Acquisitions throughout the year.
And a $400 million for stock, stock repurchases, within the fourth quarter. Nevertheless,
Speaker #3: Getting back to 2025, fourth quarter sales increased 7.3% from last year, while non-GAAP earnings increased 14.1%. For the full year, sales increased 7.9%, and non-GAAP earnings increased 11.5%.
Having generated approximately 1.1 billion in free cash flow for 2 consecutive years. We ended 2025 with a leverage ratio of just 1.4 times.
For the full year, sales increased 7.9%, and non-GAAP earnings increased 11.5%. Throughout Teledyne, our defense businesses remained healthy, and our short-cycle commercial businesses continued to recover, with most product families increasing either sequentially or year over year. In digital imaging, Teledyne FLIR performed very well, with particular strength in unmanned and other defense surveillance systems, while within marine instrumentation, we achieved record sales of autonomous underwater vehicles.
Last week, we continued our String of Pearls strategy with the acquisition of DD scientific a uk-based manufacturer of high-performance electrochemical gas sensors.
Speaker #3: Throughout Teledyne, our defense businesses remained healthy, and our short-cycle commercial businesses continued to recover, with most product families increasing either sequentially or year over year.
Gas sensors, are not only a critical technology component used in our environmental instruments.
but such and sensors are also an attractive consumable business with high recurring Revenue,
Turning to 2026.
Speaker #3: In digital imaging, Teledyne FLIR performed very well with particular strength in unmanned and others defense surveillance systems, while within marine instrumentation, we achieved record sales of autonomous underwater vehicles.
While it's still early.
We are reasonably confident.
In our current outlook for both revenue and earnings. That is
We Believe full year 2026 Revenue will be approximately 6.37 billion.
Speaker #3: In terms of capital deployment, 2025 was our second largest year in history, with over $850 million spent on acquisitions throughout the year, and $400 million for stock repurchases within the fourth quarter.
Robert Mehrabian: In terms of capital deployment, 2025 was our second-largest year in history, with over $850 million spent on acquisitions throughout the year and $400 million for stock repurchases within the Q4. Nevertheless, having generated approximately $1.1 billion in free cash flow for two consecutive years, we ended 2025 with a leverage ratio of just 1.4 times. Last week, we continued our String of Pearls strategy with the acquisition of DD Scientific, a UK-based manufacturer of high-performance electrochemical gas sensors. Gas sensors are not only a critical technology component used in our environmental instruments, but such sensors are also an attractive consumable business with high recurring revenue. Turning to 2026, while it's still early, we are reasonably confident in our current outlook for both revenue and earnings.
In terms of capital deployment, 2025 was our second-largest year in history, with over $850 million spent on acquisitions throughout the year and $400 million for stock repurchases within the Q4. Nevertheless, having generated approximately $1.1 billion in free cash flow for two consecutive years, we ended 2025 with a leverage ratio of just 1.4 times. Last week, we continued our String of Pearls strategy with the acquisition of DD Scientific, a UK-based manufacturer of high-performance electrochemical gas sensors.
On now and non-gaap earnings. At the midpoint will be approximately 23.65, both of, which are consistent with current consensus estimates.
Speaker #3: Nevertheless, having generated approximately $1.1 billion in free cash flow for two consecutive years, we ended 2025 with a leverage ratio of just 1.4 times.
As in 2024 and 2025, we expect normal seasonality in 2026 with approximately 48% of sales and 46% of earnings. In the first half of the year,
Speaker #3: Last week, we continued our string-of-pearls strategy with the acquisition of DD Scientific, a UK-based manufacturer of high-performance electrochemical gas sensors. Gas sensors are not only a critical technology component used in our environmental instruments, but such sensors are also an attractive consumable business with high recurring revenue.
George will now comment on the performance of our 4 business segments.
Thank you, Robert.
Quarter sales, increased 3.4% despite a tough comparison primarily due to strong sales from tudeen Fleer.
Gas sensors are not only a critical technology component used in our environmental instruments, but such sensors are also an attractive consumable business with high recurring revenue. Turning to 2026, while it's still early, we are reasonably confident in our current outlook for both revenue and earnings.
specifically infrared Imaging components and subsystems, many of which are used in our customers unmanned systems increased over 20% while sales of Fleer surveillance products and complete unmanned air systems also grew
Speaker #3: Turning to 2026, while it's still early, we are reasonably confident in our current outlook for both revenue and earnings. That is, we believe full-year 2026 revenue will be approximately $6.37 billion, and non-GAAP earnings at the midpoint will be approximately $23.65.
Clearer. Maritime sales. Were also a record due in part to Imaging systems for unmanned surface vessels and continued positioning of the business to Industrial and defense markets.
Robert Mehrabian: That is, we believe Q2 2026 revenue will be approximately $6.37 billion, and non-GAAP earnings at the midpoint will be approximately $23.65, both of which are consistent with current consensus estimates. As in 2024 and 2025, we expect normal seasonality in 2026, with approximately 48% of sales and 46% of earnings in the first half of the year. George will now comment on the performance of our four business segments.
That is, we believe Q2 2026 revenue will be approximately $6.37 billion, and non-GAAP earnings at the midpoint will be approximately $23.65, both of which are consistent with current consensus estimates. As in 2024 and 2025, we expect normal seasonality in 2026, with approximately 48% of sales and 46% of earnings in the first half of the year. George will now comment on the performance of our four business segments.
Sales of sensors and cameras for industrial Machine Vision applications increased year-over-year but were offset by lower sales of X-ray, detectors, and scientific cameras.
In the fourth quarter, we were awarded our first production rate contract in the loading munition Market under the Marine Corps or organic Precision, fires light, or opfl programs.
Speaker #3: Both of which are consistent with current consensus estimates. As in 2024 and 2025, we expect normal seasonality in 2026 with approximately 48% off sales and 46% off earnings in the first half of the year.
Also on December 19th, the US space development agency, awarded 4 Prime contracts for 72 tranche 3 tracking layer missile, warning missile, tracking satellites. And we were selected to supply space-based infrared detectors to 3 of the 4 Primes.
this continues our very strong participation, across each of sda's, tracking layer programs and positions us well for future golden, dome related contracts,
Speaker #3: George will now comment on the performance of our four business segments.
Non-gaap operating margin in the segment increased 180 basis points to 24.7%.
Speaker #2: Thank you, Robert. In the digital imaging segment, fourth quarter sales increased 3.4% despite a tough comparison, primarily due to strong sales from Teledyne FLIR.
George Bobb: Thank you, Robert. In the digital imaging segment, Q4 sales increased 3.4% despite a tough comparison, primarily due to strong sales from Teledyne FLIR. Specifically, infrared imaging components and subsystems, many of which are used in our customers' unmanned systems, increased over 20%, while sales of FLIR surveillance products and complete unmanned air systems also grew. FLIR maritime sales were also a record due in part to imaging systems for unmanned surface vessels and continued positioning of the business to industrial and defense markets. Sales of sensors and cameras for industrial machine vision applications increased year over year, but were offset by lower sales of X-ray detectors and scientific cameras. In Q4, we were awarded our first production rate contract in the loitering munition market under the Marine Corps Organic Precision Fires-Light, or OPFL, program. Also, on 19 December, the U.S.
George Bobb: Thank you, Robert. In the digital imaging segment, Q4 sales increased 3.4% despite a tough comparison, primarily due to strong sales from Teledyne FLIR. Specifically, infrared imaging components and subsystems, many of which are used in our customers' unmanned systems, increased over 20%, while sales of FLIR surveillance products and complete unmanned air systems also grew. FLIR maritime sales were also a record due in part to imaging systems for unmanned surface vessels and continued positioning of the business to industrial and defense markets.
A record for the segment since fully incorporating Fleer in 2021.
In the instrumentation segment, which consists of our marine environmental and test and measurement businesses.
Speaker #2: Specifically, infrared imaging components and subsystems—many of which are used in our customers' unmanned systems—increased over 20%, while sales of FLIR surveillance products and complete unmanned air systems also grew.
Fourth quarter total sales increased 3.7% versus last year.
Speaker #2: FLIR Maritime sales were also a record due in part to imaging systems for unmanned surface vessels, and continued positioning of the business to industrial and defense markets.
Sales of sensors and cameras for industrial machine vision applications increased year over year, but were offset by lower sales of X-ray detectors and scientific cameras. In Q4, we were awarded our first production rate contract in the loitering munition market under the Marine Corps Organic Precision Fires-Light, or OPFL, program. Also, on 19 December, the U.S.
Speaker #2: Sales of sensors and cameras for industrial machine vision applications increased year over year, but were offset by lower sales of X-ray detectors and scientific cameras.
Overall sales of marine instruments, increase 3.3%, due to strong sales of interconnects, used in offshore energy production and for us Virginia and Columbia class submarines, as well as the record sales of underwater autonomous vehicles that Robert mentioned earlier. However, these were partially offset by some reduced sales of products for hydrography and oceanographic research.
Speaker #2: In the fourth quarter, we were awarded our first production rate contract in the loitering munition market under the Marine Corps Organic Precision Fires Light, or OPFL, program.
Sales of environmental instruments, increased 6.1%, this primarily resulted from higher sales for gas, safety and ambient air, and Emissions to monitoring instrumentation combined with stabilization, in sales of laboratory and life, science and instruments.
Speaker #2: Also, on December 19th, the U.S. Space Development Agency awarded four prime contracts for 72 Tranche 3 Tracking Layer missile warning and missile tracking satellites, and we were selected to supply space-based infrared detectors to three of the four primes.
George Bobb: Space Development Agency awarded four prime contracts for 72 Tranche 3 Tracking Layer missile warning missile tracking satellites, and we were selected to supply space-based infrared detectors to three of the four primes. This continues our very strong participation across each of SDA's tracking layer programs and positions us well for future Golden Dome-related contracts. Non-GAAP operating margin in the segment increased 180 basis points to 24.7%, a record for the segment since fully incorporating FLIR in 2021. In the instrumentation segment, which consists of our marine, environmental, and test and measurement businesses, Q4 total sales increased 3.7% versus last year. Overall, sales of marine instruments increased 3.3% due to strong sales of interconnects used in offshore energy production and for US Virginia-class and Columbia-class submarines, as well as the record sales of underwater autonomous vehicles that Robert mentioned earlier.
Space Development Agency awarded four prime contracts for 72 Tranche 3 Tracking Layer missile warning missile tracking satellites, and we were selected to supply space-based infrared detectors to three of the four primes. This continues our very strong participation across each of SDA's tracking layer programs and positions us well for future Golden Dome-related contracts. Non-GAAP operating margin in the segment increased 180 basis points to 24.7%, a record for the segment since fully incorporating FLIR in 2021.
Bills of electronic system measurement systems which include oscilloscopes protocol analyzers and ethernet, traffic, generators increased, 1.4% year-over-year but greater than 10% sequentially from the third quarter.
Speaker #2: This continues our very strong participation across each of SDA's tracking layer programs and positions us well for future Golden Dome-related contracts. Non-GAAP operating margin in the segment increased 180 basis points to 24.7%.
Instrumentation non-gaap operating margin in the fourth quarter decreased slightly on a tough comparison. However, it increased 36 basis points for the full year 2025 to a record 28.4%
Speaker #2: A record for the segment since fully incorporating FLIR in 2021. In the Instrumentation segment, which consists of our Marine, Environmental, and Test and Measurement businesses, fourth quarter total sales increased 3.7% versus last year.
In the Aerospace and defense Electronics, segment, 4th quarter sales increased 40.4%, primarily driven by the key optic and micropack Acquisitions as well as organic growth of other defense electronics and Commercial Aerospace products.
In the instrumentation segment, which consists of our marine, environmental, and test and measurement businesses, Q4 total sales increased 3.7% versus last year. Overall, sales of marine instruments increased 3.3% due to strong sales of interconnects used in offshore energy production and for US Virginia-class and Columbia-class submarines, as well as the record sales of underwater autonomous vehicles that Robert mentioned earlier.
non-gaap segment, margin decreased year-over-year, due to comparatively lower current margins at the recently acquired businesses
Speaker #2: Overall sales of marine instruments increased 3.3% due to strong sales of interconnects used in offshore energy production and for U.S. Virginia- and Columbia-class submarines, as well as the record sales of underwater autonomous vehicles that Robert mentioned earlier.
Speaker #2: However, these were partially offset by some reduced sales of products for hydrography, and oceanographic research. Sales of environmental instruments increased 6.1%. This primarily resulted from higher sales for gas safety and ambient air and emissions monitoring instrumentation, combined with stabilization in sales of laboratory and life sciences instruments.
George Bobb: However, these were partially offset by some reduced sales of products for hydrography and oceanographic research. Sales of environmental instruments increased 6.1%. This primarily resulted from higher sales for gas safety and ambient air and emissions monitoring instrumentation, combined with stabilization in sales of laboratory and life sciences instruments. Sales of electronic test and measurement systems, which include oscilloscopes, protocol analyzers, and Ethernet traffic generators, increased 1.4% year over year, but greater than 10% sequentially from Q3. Instrumentation non-GAAP operating margin in Q4 decreased slightly on a tough comparison. However, it increased 36 basis points for the full year 2025 to a record 28.4%. In the aerospace and defense electronics segment, Q4 sales increased 40.4%, primarily driven by the Qioptiq and Micropac acquisitions, as well as organic growth of other defense electronics and commercial aerospace products.
However, these were partially offset by some reduced sales of products for hydrography and oceanographic research. Sales of environmental instruments increased 6.1%. This primarily resulted from higher sales for gas safety and ambient air and emissions monitoring instrumentation, combined with stabilization in sales of laboratory and life sciences instruments. Sales of electronic test and measurement systems, which include oscilloscopes, protocol analyzers, and Ethernet traffic generators, increased 1.4% year over year, but greater than 10% sequentially from Q3.
For the engineered system, segments. Fourth quarter Revenue, decreased 9.9% due in part to delayed contract Awards, originally anticipated in the fourth quarter. However, despite the lower Revenue segments, operating margin increased 2559, basis points due to better performance on fixed price contracts.
I will now pass the call back to Robert.
Thanks George in conclusion.
I want to reflect on our performance over the last couple of years and the path forward.
In 2003 and 2024.
Speaker #2: Sales of electronic test and measurement systems, which include oscilloscopes, protocol analyzers, and Ethernet traffic generators, increased 1.4% year over year, but grew more than 10% sequentially from the third quarter.
23 and 24, the strength of longer cycle businesses, including tudeen, Fleer Marine, instrumentation, and Aerospace. And defense Electronics was largely masked.
Speaker #2: Instrumentation non-GAAP operating margin in the fourth quarter decreased slightly on a tough comparison; however, it increased 36 basis points for the full year 2025 to a record 28.4%.
Instrumentation non-GAAP operating margin in Q4 decreased slightly on a tough comparison. However, it increased 36 basis points for the full year 2025 to a record 28.4%. In the aerospace and defense electronics segment, Q4 sales increased 40.4%, primarily driven by the Qioptiq and Micropac acquisitions, as well as organic growth of other defense electronics and commercial aerospace products.
By declines in certain short cycle markets.
Such as industrial, Machine Vision, Electronic test and measurement and laboratory and life sciences.
I believe our results.
Speaker #2: In the aerospace and defense electronics segment, fourth quarter sales increased 40.4%, primarily driven by the kioptic and micropack acquisitions as well as organic growth of other defense electronics and commercial aerospace products.
Speaker #2: Non-GAAP segment margin decreased year over year due to comparatively lower current margins at the recently acquired businesses. For the Engineered Systems segment, fourth quarter revenue decreased 9.9% due in part to delayed contract awards originally anticipated in the fourth quarter.
George Bobb: Non-GAAP segment margin decreased year over year due to comparatively lower current margins at the recently acquired businesses. For the engineered systems segment, Q4 revenue decreased 9.9% due in part to delayed contract awards originally anticipated in Q4. However, despite the lower revenue, segment operating margin increased 259 basis points due to better performance on fixed-price contracts. I will now pass the call back to Robert.
Non-GAAP segment margin decreased year over year due to comparatively lower current margins at the recently acquired businesses. For the engineered systems segment, Q4 revenue decreased 9.9% due in part to delayed contract awards originally anticipated in Q4. However, despite the lower revenue, segment operating margin increased 259 basis points due to better performance on fixed-price contracts. I will now pass the call back to Robert.
In 2025, proved the balance and the resilience of our business portfolio. Allowing us to cut costs improve earnings and significantly grow free cash flow and delivery. While simultaneously deploying capital on Acquisitions and opportunistic stock repurchases.
Speaker #2: However, despite the lower revenue, segment operating margin increased 259 basis points due to better performance on fixed-price contracts. I will now pass the call back to Robert.
Industrial markets and others be began in na recovery and the strength of our longer cycle businesses began to show through.
Today we remain confident in executing, our strategy of operational excellence.
Speaker #1: Thanks, George. In conclusion, I want to reflect on our performance over the last couple of years and the path forward. In 2023 and 2024, the strength of longer-cycle businesses, including Teledyne FLIR, marine instrumentation, and aerospace and defense electronics, was largely masked by declines in certain short-cycle markets such as industrial machine vision, electronic test and measurement, and laboratory and life sciences.
Robert Mehrabian: Thanks, George. In conclusion, I want to reflect on our performance over the last couple of years and the path forward. In 2023 and 2024, Q3 and Q4, the strength of longer-cycle businesses, including Teledyne FLIR, marine instrumentation, and aerospace and defense electronics, was largely masked by declines in certain short-cycle markets such as industrial machine vision, electronic test and measurement, and laboratory and life sciences. I believe our results in 2025 proved the balance and the resilience of our business portfolio, allowing us to cut costs, improve earnings, and significantly grow free cash flow and deleverage, while simultaneously deploying capital on acquisitions and opportunistic stock repurchases.
Robert Mehrabian: Thanks, George. In conclusion, I want to reflect on our performance over the last couple of years and the path forward. In 2023 and 2024, Q3 and Q4, the strength of longer-cycle businesses, including Teledyne FLIR, marine instrumentation, and aerospace and defense electronics, was largely masked by declines in certain short-cycle markets such as industrial machine vision, electronic test and measurement, and laboratory and life sciences.
Focused Acquisitions and strong stock repurchases. When we believe the market does not reflect the broad base of our Technologies and competitiveness.
As we enter 2026.
We Believe growth again will be led by our long cycle business. However, unlike the recent past, we currently believe that none of our short cycle. Businesses will contract contract on a full year basis,
In addition.
I believe our results in 2025 proved the balance and the resilience of our business portfolio, allowing us to cut costs, improve earnings, and significantly grow free cash flow and deleverage, while simultaneously deploying capital on acquisitions and opportunistic stock repurchases.
Speaker #1: I believe our results in 2025 prove the balance and resilience of our business portfolio, allowing us to cut costs, improve earnings, and significantly grow free cash flow and deleverage.
Speaker #1: While simultaneously deploying capital on acquisitions and opportunistic stock repurchases. Throughout 2025, as comparisons eased in some industrial markets and others began a nascent recovery, and the strength of our longer-cycle businesses began to show through, today we remain confident in executing our strategy of operational excellence, focused acquisitions, and stock repurchases when we believe the market does not reflect the broad base of our technologies and competitiveness.
Our leverage ratio remains at the lowest level in years, providing ample Financial flexibility to continue our strategy. I will not turn the call over to Steve. Thank you, Robert and good morning. I will first discuss some additional financials fourth quarter, not covered by Robert. And then I will discuss our first quarter and full year 2026 Outlook
Robert Mehrabian: Throughout 2025, as comparisons eased in some industrial markets and others began a nascent recovery and the strength of our longer-cycle businesses began to show through, today we remain confident in executing our strategy of operational excellence, focused acquisitions, and stock repurchases when we believe the market does not reflect the broad base of our technologies and competitiveness. As we enter 2026, we believe growth again will be led by our long-cycle business. However, unlike the recent past, we currently believe that none of our short-cycle businesses will contract on a full-year basis. In addition, our leverage ratio remains at the lowest level in years, providing ample financial flexibility to continue our strategy. I will now turn the call over to Steve.
Throughout 2025, as comparisons eased in some industrial markets and others began a nascent recovery and the strength of our longer-cycle businesses began to show through, today we remain confident in executing our strategy of operational excellence, focused acquisitions, and stock repurchases when we believe the market does not reflect the broad base of our technologies and competitiveness.
in the fourth quarter, cash flow from operating activities was 379 million compared with 332.4 million in 2024
Free cash flow. That is cash flow from operating activities, less Capital expenditures was 339.2 million in the fourth quarter of 2025 our record for talodyn, compared with 303.4 million in 2024
cash flow increased year-over-year in the fourth quarter primarily due to favorable operating results in the fourth quarter of 2025 compared with 2024
As we enter 2026, we believe growth again will be led by our long-cycle business. However, unlike the recent past, we currently believe that none of our short-cycle businesses will contract on a full-year basis. In addition, our leverage ratio remains at the lowest level in years, providing ample financial flexibility to continue our strategy. I will now turn the call over to Steve.
Capital expenditures were 39.8 billion in the fourth quarter of 2025 compared with 29 million in 2024.
Depreciation and amortization expense, was 84.6 million in the fourth quarter of 2025 compared with 77.2 million in 2024.
We ended the quarter with 2.12 billion dollars of net, debt, that is approximately 2.48 billion dollars of debt less cash of 352.4 million.
Stephen Blackwood: Thank you, Robert, and good morning. I will first discuss some additional financials for Q4 not covered by Robert, and then I will discuss our Q1 and Q2 2026 outlook. In Q4, cash flow from operating activities was $379 million, compared with $332.4 million in 2024. Free cash flow, that is, cash flow from operating activities less capital expenditures, was $339.2 million in Q4 of 2025, our record for Teledyne, compared with $303.4 million in 2024. Cash flow increased year over year in Q4, primarily due to favorable operating results in Q4 of 2025 compared with 2024. Capital expenditures were $39.8 million in Q4 of 2025, compared with $29 million in 2024. Depreciation and amortization expense was $84.6 million in Q4 of 2025, compared with $77.2 million in 2024.
Stephen Blackwood: Thank you, Robert, and good morning. I will first discuss some additional financials for Q4 not covered by Robert, and then I will discuss our Q1 and Q2 2026 outlook. In Q4, cash flow from operating activities was $379 million, compared with $332.4 million in 2024. Free cash flow, that is, cash flow from operating activities less capital expenditures, was $339.2 million in Q4 of 2025, our record for Teledyne, compared with $303.4 million in 2024.
Now, turning to our Outlook management. Currently believes that Gap earnings per share in the first quarter of 2026 will be in the range of 4.45 to 459 per share with non-gaap earnings in the range of 5.40 to 5.50.
And for the full year 2026, we believe that Gap earnings per share will be in the range of $19.76 to 2022 with non-gaap earnings per share in the range of 23.45 to $23.85. I'll now pass the call back to Robert
Cash flow increased year over year in Q4, primarily due to favorable operating results in Q4 of 2025 compared with 2024. Capital expenditures were $39.8 million in Q4 of 2025, compared with $29 million in 2024. Depreciation and amortization expense was $84.6 million in Q4 of 2025, compared with $77.2 million in 2024.
Thank you, Steve. We would like to take your questions now. Operator. If you're ready to proceed, please go ahead with the questions and answers.
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Our first question comes from the line of Greg Conrad with Jeffrey's, please proceed with your question.
Good morning.
maybe just, uh,
Stephen Blackwood: We ended the quarter with $2.12 billion of net debt, that is, approximately $2.48 billion of debt less cash of $352.4 million. Now turning to our outlook, management currently believes that GAAP earnings per share in Q1 of 2026 will be in the range of $4.45 to 4.59 per share, with non-GAAP earnings in the range of $5.40 to 5.50. For Q2 2026, we believe that GAAP earnings per share will be in the range of $19.76 to 20.22, with non-GAAP earnings per share in the range of $23.45 to 23.85. I will now pass the call back to Robert.
We ended the quarter with $2.12 billion of net debt, that is, approximately $2.48 billion of debt less cash of $352.4 million. Now turning to our outlook, management currently believes that GAAP earnings per share in Q1 of 2026 will be in the range of $4.45 to 4.59 per share, with non-GAAP earnings in the range of $5.40 to 5.50. For Q2 2026, we believe that GAAP earnings per share will be in the range of $19.76 to 20.22, with non-GAAP earnings per share in the range of $23.45 to 23.85. I will now pass the call back to Robert.
To start on the Outlook, uh, for revenues. I mean you gave a little bit of color around short cycle, but just thinking about that 4% growth, is there any way to parse, you know, organic versus inorganic given the the smaller recent deals? Plus, you know, how you're thinking about, you know, long cycle growth in backlog versus maybe initial assumptions around the, the short cycle business is overall
Okay.
uh, Greg let me start with, um,
Organic versus non-organic, we think. Uh, most of the growth would be organic about 3.6% non-organic a little over 4% 4.2% about
uh, in terms of, um,
Robert Mehrabian: Thank you, Steve. We would like to take your questions now. Operator, if you're ready to proceed, please go ahead with the questions and answers.
Robert Mehrabian: Thank you, Steve. We would like to take your questions now. Operator, if you're ready to proceed, please go ahead with the questions and answers.
a little
Operator: Thank you. If you'd 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. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Our first question comes from the line of Greg Conrad with Jefferies. Please proceed with your question.
Operator: Thank you. If you'd 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. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Our first question comes from the line of Greg Conrad with Jefferies. Please proceed with your question.
smaller increases in.
Um certain areas like environmental and tests and measurements, maybe a little over 2% but that'll be offset with the healthy increase in our marine instruments.
[Analyst] (Jefferies): Good morning.
Greg Konrad: Good morning. Maybe just. To start on the outlook for revenues, I mean, you gave a little bit of color around short cycle, but just thinking about that 4% growth, is there any way to parse organic versus inorganic given the smaller recent deals, plus how you're thinking about long-cycle growth in backlog versus maybe initial assumptions around the short-cycle businesses overall?
Greg Konrad: Maybe just.
[Analyst] (Jefferies): Good morning.
Greg Konrad: To start on the outlook for revenues, I mean, you gave a little bit of color around short cycle, but just thinking about that 4% growth, is there any way to parse organic versus inorganic given the smaller recent deals, plus how you're thinking about long-cycle growth in backlog versus maybe initial assumptions around the short-cycle businesses overall?
About 5%. And we think clear, uh, will grow just under 5% maybe 4.6% to be accurate. So, I don't see a lot of difference between short and long, long cycle. And, as I mentioned before, uh, we don't believe over the years, the total year in 2006, uh, 26. Uh, we're going to see, um, shrinkage of our short cycle businesses that we have before.
Robert Mehrabian: Okay. Greg, let me start with organic versus non-organic. We think most of the growth would be organic, about 3.6%. Non-organic, a little over 4%, 4.2%, about. In terms of short and long cycle, I don't see a lot of differences between those two. We think that we have probably a little smaller increases in certain areas like environmental and test and measurement, maybe a little over 2%, but that'll be offset with a healthy increase in our marine instruments, about 5%. And we think FLIR will grow just under 5%, maybe 4.6% to be accurate. So I don't see a lot of difference between short and long cycle. And as I mentioned before, we don't believe over the year, the total year in 2026, we're going to see shrinkage of our short-cycle businesses that we had before.
Robert Mehrabian: Okay. Greg, let me start with organic versus non-organic. We think most of the growth would be organic, about 3.6%. Non-organic, a little over 4%, 4.2%, about. In terms of short and long cycle, I don't see a lot of differences between those two. We think that we have probably a little smaller increases in certain areas like environmental and test and measurement, maybe a little over 2%, but that'll be offset with a healthy increase in our marine instruments, about 5%.
And then, maybe just a, a follow up to that. I mean, you had really strong, uh, Digital Imaging margins in Q4. I, I think you called out, you know, a contingent liability reversal. But, you know, how are you thinking about the, the exit rate for digital imaging? And, you know, maybe the the biggest opportunities into 2026 giving you've talked about, you know, a 24% Target in the past.
Yeah, let me start with, uh, the uh, question on the contingent liability. I think, uh, if you look at that and you balance it out versus, uh, uh Rift costs. You know, we've been reducing costs as we go along, fundamentally, it added about 50 basis points, uh, to our, uh, uh, margins in Q4,
And we think FLIR will grow just under 5%, maybe 4.6% to be accurate. So I don't see a lot of difference between short and long cycle. And as I mentioned before, we don't believe over the year, the total year in 2026, we're going to see shrinkage of our short-cycle businesses that we had before.
So, even with that, uh, we, we have the 24% margin or the little in excess of 24, uh, margin in 2025, fourth quarter for the full year 2025, uh, Digital Imaging. Margins came in at about 22.6%,
Which was about 30 basis points, improved over the prior year.
Greg Konrad: And then maybe just a follow-up to that. I mean, you had really strong digital imaging margins in Q4. I think you called out a contingent liability reversal. But how are you thinking about the exit rate for digital imaging and maybe the biggest opportunities into 2026, given you've talked about a 24% target in the past?
Greg Konrad: And then maybe just a follow-up to that. I mean, you had really strong digital imaging margins in Q4. I think you called out a contingent liability reversal. But how are you thinking about the exit rate for digital imaging and maybe the biggest opportunities into 2026, given you've talked about a 24% target in the past?
2026 with a little more hopeful and we believe that the margins would go up, maybe another 80 80 basis points. And, uh, get to about 23.4%, uh, and out with good luck. I hope we'll get to the 24%.
Uh, thank you in that quarter, thanks.
Thank you.
Thank you. Our next question comes from the line of
Robert Mehrabian: Yeah. Let me start with the question on the contingent liability. I think if you look at that and you balance it out versus RIF costs, we've been reducing costs as we go along. Fundamentally, it added about 50 basis points to our margins in Q4. So even with that, we have a 24% margin or a little in excess of 24% margin in 2025, Q4. For the full year, 2025, digital imaging margins came in at about 22.6%, which was about 30 basis points improved over the prior year. 2026, we're a little more hopeful, and we believe that the margins would go up maybe another 80 basis points and get to about 23.4% and up. With good luck, I hope we'll get to the 24%.
Robert Mehrabian: Yeah. Let me start with the question on the contingent liability. I think if you look at that and you balance it out versus RIF costs, we've been reducing costs as we go along. Fundamentally, it added about 50 basis points to our margins in Q4. So even with that, we have a 24% margin or a little in excess of 24% margin in 2025, Q4.
UBS please proceed with your question.
Hey uh this is Zach wall. Jasper on for a mitt Maroa today. Uh my first question is just the implied 1 Q guide and suggests about 10% earnings growth year on year, while the full year guidance like implies about 7%. Uh, just going to give some help just around the Cadence of the year and like the implied cation because compared to last year, the earnings comps are relatively similar 1 age versus 28. Thank you.
Yeah. Um,
For the full year, 2025, digital imaging margins came in at about 22.6%, which was about 30 basis points improved over the prior year. 2026, we're a little more hopeful, and we believe that the margins would go up maybe another 80 basis points and get to about 23.4% and up. With good luck, I hope we'll get to the 24%.
you know, it's it's easier comps in q1, uh, versus last year. Uh, we improved obviously earnings. As you said, throughout the year, uh, traditionally we've been about, uh, 48% in the first half of the year in revenue, and 46% in profitability, we believe that support going to be what happens, uh, uh, the coming year. Now, I'm hoping that we can improve on both of those numbers as we get the year started. But it's the we just got through 3 weeks of the 2026. So I'm hesitant to go further out on a limb that than I have.
Greg Konrad: Thank you, and nice quarter. Thanks.
Greg Konrad: Thank you, and nice quarter. Thanks.
Robert Mehrabian: Thank you.
Robert Mehrabian: Thank you.
Great, thank you so much.
Operator: Thank you. Our next question comes from the line of Amit Mehrotra with Deutsche Bank. Please proceed with your question.
Operator: Thank you. Our next question comes from the line of Amit Mehrotra with Deutsche Bank. Please proceed with your question.
Thanks Zach.
[Analyst]: Hey, this is Zach Walsh, asking on behalf of Amit Mehrotra today. My first question is just the implied Q1 guidance suggests about 10% earnings growth year on year, while the full-year guidance implies about 7%. Just can we get some help just around the cadence of the year and the implied acceleration? Because compared to last year, the earnings comps are relatively similar, H1 versus H2. Thank you.
Zach Walljasper: Hey, this is Zach Walsh, asking on behalf of Amit Mehrotra today. My first question is just the implied Q1 guidance suggests about 10% earnings growth year on year, while the full-year guidance implies about 7%. Just can we get some help just around the cadence of the year and the implied acceleration? Because compared to last year, the earnings comps are relatively similar, H1 versus H2. Thank you.
Thank you. Our next question comes from the line of Andrew bascal with BNP Power Boss. Please proceed with your question.
Hey, good morning, everyone.
Morning, Andrew.
Um, I was hoping you could add some color to some of these bigger, seemingly, bigger defensive Awards. You're you're talking about specifically, uh, the tracking
Which seems very topical currently. Um, can you any way you can size that the size of that award or the Contra contribution? You expect paladines to receive in 26 and Beyond.
Robert Mehrabian: Yeah. It's easier comps in Q1 versus last year. We improved, obviously, earnings, as you said, throughout the year. Traditionally, we've been about 48% in the first half of the year in revenue and 46% in profitability. We believe that's about going to be what happens the coming year. Now, I'm hoping that we can improve on both of those numbers as we get the year started, but we just got through three weeks of 2026, so I'm hesitant to go further out on a limb than I have.
Robert Mehrabian: Yeah. It's easier comps in Q1 versus last year. We improved, obviously, earnings, as you said, throughout the year. Traditionally, we've been about 48% in the first half of the year in revenue and 46% in profitability. We believe that's about going to be what happens the coming year. Now, I'm hoping that we can improve on both of those numbers as we get the year started, but we just got through three weeks of 2026, so I'm hesitant to go further out on a limb than I have.
On the tracking layer, of course, we provide very high performance, infrared, arrays.
Um, and that program for us will be north of a hundred million dollars over the next few years.
And and what our, um,
It sounds like you're selling to these you know 3 of the 4 different primes. What what can we expect in terms of margin contribution from something like that? Is it higher versus Corporate average or lower or what?
Let's say it's it's about average. I mean we uh yes.
Yeah, it's uh, as George mentioned. Uh, these are uh, going to probably be, uh, fixed price contracts. So our performance will improve again as it always does as a function of time.
[Analyst]: Great. Thank you so much.
Zach Walljasper: Great. Thank you so much.
Robert Mehrabian: Thanks, Zach.
Robert Mehrabian: Thanks, Zach.
Operator: Thank you. Our next question comes from the line of Andrew Buscaglia with BNP Paribas. Please proceed with your question.
Operator: Thank you. Our next question comes from the line of Andrew Buscaglia with BNP Paribas. Please proceed with your question.
So early on maybe our margins will be a little less, but overall, these are really good programs for us.
Greg Konrad: Hey, good morning, everyone.
Andrew Buscaglia: Hey, good morning, everyone.
Robert Mehrabian: Morning, Andrew.
Robert Mehrabian: Morning, Andrew.
And it's I imagine this is multi-year, you'll see this so you'll see additional contribution in your data or just, you know, something in 2026 that subside thereafter.
Greg Konrad: I was hoping you could add some color to some of these bigger, seemingly bigger defense awards you're talking about, specifically the tracking award, which seems very topical currently. Any way you can size the size of that award or the contribution you expect Teledyne to receive in 2026 and beyond?
Andrew Buscaglia: I was hoping you could add some color to some of these bigger, seemingly bigger defense awards you're talking about, specifically the tracking award, which seems very topical currently. Any way you can size the size of that award or the contribution you expect Teledyne to receive in 2026 and beyond?
So we'll start to perform in 2026, but it'll be over a 2 or 3 year period.
Got it. Okay, thank you.
Thank you. Our next question comes from the line of Jim rashidi with me to Main Company. Please proceed with your question.
Robert Mehrabian: Yeah. Perhaps that's a question I can pass to George.
Robert Mehrabian: Yeah. Perhaps that's a question I can pass to George.
George Bobb: Sure. So on the tracking layer, of course, we provide very high-performance infrared arrays. And that program for us will be north of $100 million over the next few years.
George Bobb: Sure. So on the tracking layer, of course, we provide very high-performance infrared arrays. And that program for us will be north of $100 million over the next few years.
Speaker #6: infrared arrays. And that program for us will be north of $100 million. Over the next few
Hi, thank you. Good morning. Um, I apologize if if you gave this on the call I I had to jump off momentarily but did you provide an order number and Robert any color as to have the book to bill was in the the main segments of the business?
Speaker #6: years.
uh, not yet Jim but I will now, uh,
Greg Konrad: And it sounds like you're selling to these three of the four defense primes. What can we expect in terms of margin contribution from something like that? Is it higher versus corporate average or lower or what?
Andrew Buscaglia: And it sounds like you're selling to these three of the four defense primes. What can we expect in terms of margin contribution from something like that? Is it higher versus corporate average or lower or what?
First, uh, we in the fourth quarter.
Speaker #7: these three of the four defense primes. What can we expect in terms of margin contribution from something like that? Is it higher versus corporate average or lower or what?
Speaker #1: I would say it's about average. I mean, yes. Yeah. It's as George mentioned, these are going to probably be fixed-price contracts. So our performance will improve again as it always does as a function of time.
George Bobb: I would say it's about average. I mean, yes.
George Bobb: I would say it's about average. I mean, yes.
Uh which is almost um recent numbers that I can get. Uh we think instrumentation as a whole would be is about 1.
Robert Mehrabian: Yeah. As George mentioned, these are going to probably be fixed-price contracts. So our performance will improve again, as it always does, as a function of time. So early on, maybe our margins will be a little less, but overall, these are really good programs for us.
Robert Mehrabian: Yeah. As George mentioned, these are going to probably be fixed-price contracts. So our performance will improve again, as it always does, as a function of time. So early on, maybe our margins will be a little less, but overall, these are really good programs for us.
Digital Imaging is above 1.
Or 1.06.
Speaker #1: early on, maybe our margins will be a little less, but overall, these are really good programs for us.
Aerospace and defense is higher at 1.25 engineered systems is under 1. But that's a lumpy business and we've had some big orders during the year.
So, total for Q4 is 1.07.
Greg Konrad: I imagine this is multi-year. You'll see this additional contribution years out, or is this something in 2026 that subsides thereafter?
Andrew Buscaglia: I imagine this is multi-year. You'll see this additional contribution years out, or is this something in 2026 that subsides thereafter?
Speaker #7: multi-year; you'll see this so you'll see additional contribution years out, or is this something in 2026 that subsides
Speaker #7: thereafter?
George Bobb: We'll start to perform in 2026, but it'll be over a two or three-year period.
George Bobb: We'll start to perform in 2026, but it'll be over a two or three-year period.
And then for the full year, if you take everything for the full year, it's about 1.08. So we feel very comfortable that in all of our segments, we either at 1 or better than 1.
Speaker #1: over a two or three-year period.
Greg Konrad: Got it. Okay. Thank you.
Andrew Buscaglia: Got it. Okay. Thank you.
Speaker #3: Thank you.
Operator: Thank you. Our next question comes from the line of Jim Ricchiuti with Needham & Company. Please proceed with your questions.
Operator: Thank you. Our next question comes from the line of Jim Ricchiuti with Needham & Company. Please proceed with your questions.
Speaker #3: Our next question comes from the line of Jim Rusciutti with Needham & Company. Please proceed with your
Speaker #3: question.
Got it. Um, thank you for that. What um, what were the full year sales? Um, from the unmanned business? Again, if if you provided it, I apologize. And and I'm wondering how you're thinking about the growth in the total unmanned business in 2026.
[Analyst]: Hi. Thank you. Good morning. I apologize if you gave this on the call. I had to jump off momentarily. But did you provide an order number, Robert, any color as to how the Book-to-bill was in the main segments of the business?
James Ricchiuti: Hi. Thank you. Good morning. I apologize if you gave this on the call. I had to jump off momentarily. But did you provide an order number, Robert, any color as to how the Book-to-bill was in the main segments of the business?
Speaker #8: Thank you. Good morning.
Speaker #8: call. I had to jump off momentarily. But did you provide an order number in Robert, any color as to how the book-to-bill was in the main segments of the
It's given the pipeline, it's 20. Yeah, in 2025.
Robert Mehrabian: Not yet, Jim, but I will now. First, in the fourth quarter, which is our most recent numbers that I can get, we think instrumentation as a whole is about 1. Digital imaging is above 1 or 1.06. Aerospace and defense is higher at 1.25. Engineered systems is under 1, but that's a lumpy business, and we've had some big orders during the year. So total for Q4 is 1.07. And then for the full year, if you take everything for the full year, it's about 1.08. So we feel very comfortable that in all of our segments, we're either at 1 or better than 1.
Robert Mehrabian: Not yet, Jim, but I will now. First, in the fourth quarter, which is our most recent numbers that I can get, we think instrumentation as a whole is about 1. Digital imaging is above 1 or 1.06. Aerospace and defense is higher at 1.25. Engineered systems is under 1, but that's a lumpy business, and we've had some big orders during the year. So total for Q4 is 1.07. And then for the full year, if you take everything for the full year, it's about 1.08. So we feel very comfortable that in all of our segments, we're either at 1 or better than 1.
Speaker #1: now. First, in the fourth quarter, which is our most recent numbers that I can get, we think instrumentation as a whole would be is about 1.
I would say are a man businesses combined. All combined are about 500 million dollars. We think that'll be a little higher in 26, maybe. 10% of our overall Revenue.
Thanks very much.
Thank you. Our next question, comes.
Sorry. Go ahead, please.
Our next question comes from the line of Jonathan Sigmund with default, please proceed with your questions.
Speaker #1: year. So total, for Q4, is 1.07. And then for the full year, if you take everything for the full year, it's about 1.08. So we feel very comfortable that in all of our segments, we're either at 1 or better than 1.
Good morning. Thanks for taking my question and mayor just following up on um, on autonomous and unmanned. Uh, the the record underwater vehicle sales, can you talk a bit more about the drivers? Uh, last year's reconciliation bill at significant funding increases in this area and just how relevant is this to to your business? And are you seeing any benefit of it? Thank you.
yeah, as you know, we have uh,
Speaker #8: Got it. Thank you for that. What were the full-year sales from the unmanned business? Again, if you provided it, I apologize. And I'm wondering how you're thinking about the growth in the total unmanned business in 2026.
[Analyst]: Got it. Thank you for that. What were the full-year sales from the unmanned business? Again, if you provided it, I apologize. I'm wondering how you're thinking about the growth in the total unmanned business in 2026, just given the pipeline.
James Ricchiuti: Got it. Thank you for that. What were the full-year sales from the unmanned business? Again, if you provided it, I apologize. I'm wondering how you're thinking about the growth in the total unmanned business in 2026, just given the pipeline.
Uh, in the underwater vehicle but we have both manned and unmanned.
In the manned Vehicles, we are the sole supplier.
Speaker #8: pipeline.
Speaker #1: Yeah. And I imagine this is In Thank Okay.
Speaker #1: Yeah. And I imagine this is in. Thank you. Okay. Our next question.
Robert Mehrabian: Yeah. In 2025, I would say our unmanned businesses combined, all combined, are about $500 million. We think that'll be a little higher in 2026, maybe 10% of our overall revenue.
Robert Mehrabian: Yeah. In 2025, I would say our unmanned businesses combined, all combined, are about $500 million. We think that'll be a little higher in 2026, maybe 10% of our overall revenue.
Uh to the uh Navy Seals. And we not only have provided all the vehicles but this continuous revenue from parts and maintenance
Speaker #1: 2025, I would say our unmanned businesses combined, all combined, are about 500 million dollars. We think that'll be a little higher in '26, maybe 10% of our overall revenue.
Speaker #8: Great. Thanks very
[Analyst]: Great. Thanks very much.
James Ricchiuti: Great. Thanks very much.
Speaker #8: much.
Our glider.
Operator: Thank you. Our next question comes.
Operator: Thank you. Our next question comes.
Speaker #3: comes sorry.
Robert Mehrabian: And then.
Robert Mehrabian: And then.
Operator: Sorry.
Operator: Sorry.
Robert Mehrabian: Go ahead, please.
Robert Mehrabian: Go ahead, please.
Speaker #3: Our next question comes from the line of Jonathan Sigmund with C4. Please proceed with your question.
Operator: Our next question comes from the line of Jonathan Siegmann with Stifel. Please proceed with your questions.
Operator: Our next question comes from the line of Jonathan Siegmann with Stifel. Please proceed with your questions.
[Analyst]: Good morning. Thanks for taking my question. We're just following up on autonomous and unmanned. The record underwater vehicle sales, can you talk a bit more about the drivers? Last year's reconciliation bill had significant funding increases in this area. Just how relevant is this to your business, and are you seeing any benefit of it? Thank you.
Jonathan Siegmann: Good morning. Thanks for taking my question. We're just following up on autonomous and unmanned. The record underwater vehicle sales, can you talk a bit more about the drivers? Last year's reconciliation bill had significant funding increases in this area. Just how relevant is this to your business, and are you seeing any benefit of it? Thank you.
Speaker #9: question. And maybe just following up on autonomous and unmanned, the record underwater vehicle sales—can you talk a bit more about the drivers last year's reconciliation bill that significant funding increases in this area and just how relevant is this to your business?
Our gliders are deployed in front of uh large uh Naval operations to measure uh temperature and uh density and salinity, which all of these affect acoustic.
U tensors and speeds. So you have to compensate for those. We also have really good uh program winds, not just in the US, but specially in Europe.
Speaker #9: And are you seeing any benefit of Got it.
For, uh, security of harbors. And we provide a whole range of
Robert Mehrabian: Yeah. As you know, we have in the underwater vehicle business, we have both manned and unmanned. In the manned vehicles, we are the sole supplier to the Navy SEALs. We not only have provided all the vehicles, but there's continuous revenue from parts and maintenance. The new stuff that we're doing goes to a whole range of subsea products. Some of them have to do with infrastructure, anti-submarine warfare, and some of them have to do with just observations and measurements. For example, our gliders are deployed in front of large naval operations to measure temperature, density, and salinity, which all of these affect acoustic sensors and speeds. So you have to compensate for those. We also have really good program wins, not just in the US, but especially in Europe for security of harbors.
Robert Mehrabian: Yeah. As you know, we have in the underwater vehicle business, we have both manned and unmanned. In the manned vehicles, we are the sole supplier to the Navy SEALs. We not only have provided all the vehicles, but there's continuous revenue from parts and maintenance. The new stuff that we're doing goes to a whole range of subsea products.
Speaker #1: know, we have in the underwater vehicle, but we have both manned and unmanned. In the manned vehicles, we are the sole supplier to the Navy SEALs.
U underwater vehicles from, uh, very shallow ones that uh go only a thousand meters down deep to very large vehicles, that go as deep as uh, 3,000 M. So or more
and so we we have a whole Suite of I would say I'm just looking at a picture. I think I see about 10 or 12 different underwater vehicles that we're selling not just in the US. These are autonomous vehicles but also specially in Europe.
Some of them have to do with infrastructure, anti-submarine warfare, and some of them have to do with just observations and measurements. For example, our gliders are deployed in front of large naval operations to measure temperature, density, and salinity, which all of these affect acoustic sensors and speeds. So you have to compensate for those. We also have really good program wins, not just in the US, but especially in Europe for security of harbors.
Speaker #1: with the infrastructure anti-submarine warfare. And some of them have to do with just observations and measurements. For example, our glider are deployed in front of we'll start to perform in 2026, but it'll be are it sounds like you're selling to And what So I apologize if you gave this on the Good morning.
Great and then on the Lord ammunitions. Congratulations on that production award. Uh, can we expect to hear anything about developments with the army with with your product? Thank you very much.
Thank you. Uh, well, there's a program.
Robert Mehrabian: We provide a whole range of underwater vehicles from very shallow ones that go only 1,000 meters down deep to very large vehicles that go as deep as 3,000 meters or more. And so we have a whole suite of, I would say, I'm just looking at a picture. I think I see about 10 or 12 different underwater vehicles that we're selling, not just in the US. These are autonomous vehicles, but also especially in Europe.
We provide a whole range of underwater vehicles from very shallow ones that go only 1,000 meters down deep to very large vehicles that go as deep as 3,000 meters or more. And so we have a whole suite of, I would say, I'm just looking at a picture. I think I see about 10 or 12 different underwater vehicles that we're selling, not just in the US. These are autonomous vehicles, but also especially in Europe.
Called lasso, you may be familiar with. It's a development program and uh it hasn't all been announced but it's coming up and we're 1 of the uh participants in that program. But overall I would say uh there's not just a loading uh uh Munitions that we have introduced, but we're working on some new ones as well. So you'll hear more about that as we both develop our products as well as as we've been programmed.
Good luck with the year.
Thank you. I just uh, want to want to make sure that
Uh, when I was talking about the unmanned, on a question that, uh, Jim has, are 2025 revenue on unmanned both are ground and underwater was about 500 million. Uh, we think that'll grow about 10%. I said, it'd be 10% of Revenue in 2026.
But it probably be closer to 550.
[Analyst]: Great. And then on the loitering munitions, congratulations on that production award. Can we expect to hear anything about developments with the army with your product? Thank you very much.
Jonathan Siegmann: Great. And then on the loitering munitions, congratulations on that production award. Can we expect to hear anything about developments with the army with your product? Thank you very much.
Sorry, I needed to correct that go ahead, please.
Thank you. Our next question comes from the line of guy harlech with barklay, please proceed with your question.
Hi, good morning. Good morning, Robert.
Good morning guy.
Robert Mehrabian: Thank you. Well, there's a program called LASSO. You may be familiar with it. It's a development program. And it hasn't all been announced, but it's coming up. And we're one of the participants in that program. But overall, I would say there's not just the loitering munitions that we have introduced, but we're working on some new ones as well. So you'll hear more about that as we both develop our products as well as we win programs.
Robert Mehrabian: Thank you. Well, there's a program called LASSO. You may be familiar with it. It's a development program. And it hasn't all been announced, but it's coming up. And we're one of the participants in that program. But overall, I would say there's not just the loitering munitions that we have introduced, but we're working on some new ones as well. So you'll hear more about that as we both develop our products as well as we win programs.
Um, I just wonder how you guys feel about, um, m&a particularly maybe large m&a.
Versus share repurchases. Obviously, I saw you bought back 400 million of stock in Q4.
The stock prices Big Move upwards since then. So maybe that looks relatively less attractive than m&a, but I think a sense from a few months ago that
Quickly in encouraged by m&a prices, except for maybe bolt-on dealers or maybe you can give us an update of the the m&a picture and whether the small versus large.
[Analyst]: Good luck with the year.
Jonathan Siegmann: Good luck with the year.
Robert Mehrabian: Thank you. I just want to make sure that when I was talking about unmanned on a question that Jim asked, our 2025 revenue on unmanned, both air, ground, and underwater was about $500 million. We think that'll grow about 10%. I said it'd be 10% of revenue in 2026, but it'd probably be closer to $550 million. Sorry. I needed to correct that. Go ahead, please.
Operator: Thank you.
Robert Mehrabian: I just want to make sure that when I was talking about unmanned on a question that Jim asked, our 2025 revenue on unmanned, both air, ground, and underwater was about $500 million. We think that'll grow about 10%. I said it'd be 10% of revenue in 2026, but it'd probably be closer to $550 million. Sorry. I needed to correct that. Go ahead, please.
Sure, guy. First, let me let me go back to the stock repurchases. We we've been very, um, conservative about starkly purchases where you look at our 26 year history or we've all in, but maybe 1.2 billion and only at times were start. Our stock was really, we believed was really undervalued with respect to our peers and the market. So I would say the fourth quarter purchase was off.
Operator: Thank you. Our next question comes from the line of Guy Hardwick with Freedom Capital Markets. Please proceed with your question.
Operator: Thank you. Our next question comes from the line of Guy Hardwick with Freedom Capital Markets. Please proceed with your question.
Greg Konrad: Hi. Good morning. Good morning, Robert.
Guy Hardwick: Hi. Good morning. Good morning, Robert.
Robert Mehrabian: Good morning, Guy.
Robert Mehrabian: Good morning, Guy.
Greg Konrad: I just wonder how you guys feel about M&A, particularly maybe larger M&A versus share repurchases. Obviously, I saw you bought back $400 million of stock in Q4. The stock price has had a big move upward since then. Maybe that looks relatively less attractive than M&A, but I think a sense from a few months ago that you weren't particularly encouraged by M&A prices, except for maybe bolt-on deals. Maybe you can give us an update. We'll see the M&A picture and whether small versus large.
Guy Hardwick: I just wonder how you guys feel about M&A, particularly maybe larger M&A versus share repurchases. Obviously, I saw you bought back $400 million of stock in Q4. The stock price has had a big move upward since then. Maybe that looks relatively less attractive than M&A, but I think a sense from a few months ago that you weren't particularly encouraged by M&A prices, except for maybe bolt-on deals. Maybe you can give us an update. We'll see the M&A picture and whether small versus large.
Opportunities. As it was twice before in our history that we've bought stock, our primary driver is always been Acquisitions. And you mentioned larger Acquisitions. First, we consistently like to buy what we call the String of Pearls, small Acquisitions that we can tuck in like the 1. We just announced the the, the scientific in the UK with like to do that continuously regardless of whatever else happens on the larger acquisitions.
We have.
Good list of what's coming up, both from um uh private Equity people, who bought a range of uh uh products and businesses and combined them.
Robert Mehrabian: Sure, Guy. First, let me go back to the stock repurchases. We've been very conservative about stock repurchases. When you look at our 26-year history, we're all in about maybe $1.2 billion. And only at times where our stock was really, we believe, was really undervalued with respect to our peers and the market. So I would say the Q4 purchase was opportunistic, as it was twice before in our history that we bought stock. Our primary driver has always been acquisitions. And you mentioned larger acquisitions. First, we consistently like to buy what we call the String of Pearls, small acquisitions that we can tuck in, like the one we just announced, DD Scientific in the UK. We'd like to do that continuously regardless of whatever else happens.
Robert Mehrabian: Sure, Guy. First, let me go back to the stock repurchases. We've been very conservative about stock repurchases. When you look at our 26-year history, we're all in about maybe $1.2 billion. And only at times where our stock was really, we believe, was really undervalued with respect to our peers and the market.
And we don't mind paying a reasonably good price for an acquisition. As long as the quality of the mix of the businesses we're getting, is there what we're hesitant? And we mentioned before what we hesitant is when we're buying a picture upper and
We're building 1516 times, evda. Somebody else, walks in, and pays 2122 times. We
So I would say the Q4 purchase was opportunistic, as it was twice before in our history that we bought stock. Our primary driver has always been acquisitions. And you mentioned larger acquisitions. First, we consistently like to buy what we call the String of Pearls, small acquisitions that we can tuck in, like the one we just announced, DD Scientific in the UK. We'd like to do that continuously regardless of whatever else happens.
Really don't think that's for us. But having said that, uh, based on what we see, there's a whole range of Acquisitions what we call for a large would be
Let's say we pay a billion dollars of the or thereabouts. Uh, there's a whole range of those that are coming uh and we we more encouraged than we were in 2025.
Okay, thank you just that's very helpful. Just 1, quick uh modeling follow-up question in digital imaging. Uh what was the FX contribution in the quarter?
Robert Mehrabian: On the larger acquisitions, we have a pretty good list of what's coming up, both from private equity people who bought a range of products and businesses and combined them. We don't mind paying a reasonably good price for an acquisition as long as the quality of the mix of the businesses we're getting is there. What we're hesitant, and we mentioned before, what we're hesitant is when we're buying a fixer-upper and we're bidding 15x, 16x EBITDA, somebody else walks in and pays 21x, 22x. We really don't think that's for us. But having said that, based on what we see, there's a whole range of acquisitions. What we call, for us, large would be, let's say, we pay $1 billion or thereabouts. There's a whole range of those that are coming, and we're more encouraged than we were in 2025.
On the larger acquisitions, we have a pretty good list of what's coming up, both from private equity people who bought a range of products and businesses and combined them. We don't mind paying a reasonably good price for an acquisition as long as the quality of the mix of the businesses we're getting is there.
Uh, I can just talk to you about in general. Uh, the total contribution in 40 year was about 40 basis points.
Uh, it started negative in the year in q1.
Picked up ended in Q4 about 80 basis points and averaged out for the whole year at 40 basis points. So it was, it was there but it was not that significant
Speaker #1: good price for an
Speaker #1: Good price for an, and we're more encouraged than 22 times. Have a pretty—how big a percentage of— This concludes today's conference call.
What we're hesitant, and we mentioned before, what we're hesitant is when we're buying a fixer-upper and we're bidding 15x, 16x EBITDA, somebody else walks in and pays 21x, 22x. We really don't think that's for us. But having said that, based on what we see, there's a whole range of acquisitions. What we call, for us, large would be, let's say, we pay $1 billion or thereabouts. There's a whole range of those that are coming, and we're more encouraged than we were in 2025.
Thank you. Our next question comes from the line of Joe Giordano with TD Cowen. Please proceed with your question.
Hey, good morning, guys.
um,
I wanted to ask on on memory. Um obviously prices are up a ton and I believe there'd be applicability for you guys having to buy that across you know whether it's instrumentation or tnm and elements of of digital imaging. So can you comment on what you're seeing there? How
Big a percentage of sales. It is and how effective you've been able to pass that through to people.
Yeah, thanks. Joe. First, uh,
We don't see a risk, net risk in that area. Uh,
Greg Konrad: Okay. Thank you. That's very helpful. Just one quick modeling follow-up question. In digital imaging, what was the FX contribution in the quarter?
Guy Hardwick: Okay. Thank you. That's very helpful. Just one quick modeling follow-up question. In digital imaging, what was the FX contribution in the quarter?
Robert Mehrabian: I can just talk to you about in general. The total contribution for the year was about 40 basis points. It started negative in the year in Q1, picked up, ended in Q4 at about 80 basis points, and averaged out for the whole year at 40 basis points. So it was there, but it was not that significant.
Robert Mehrabian: I can just talk to you about in general. The total contribution for the year was about 40 basis points. It started negative in the year in Q1, picked up, ended in Q4 at about 80 basis points, and averaged out for the whole year at 40 basis points. So it was there, but it was not that significant.
Some of our businesses. As you said, specifically more geared towards test and measurement instrumentation, do use memory and may have some constraints in supply cost inflation.
Ironically.
Memory and storage suppliers.
Are also reasonably large customers of our tests and measurements instrumentation businesses. So if they spend incremental capex,
By for prop by 2 for the Memories.
Greg Konrad: Thank you.
Guy Hardwick: Thank you.
Then that's generally good for us because that's a higher margin contribution, business for us. But coming back to what I summarized. Uh, net risk is not big.
Operator: Thank you. Our next question comes from the line of Joe Giordano with TD Cowen. Please proceed with your question.
Operator: Thank you. Our next question comes from the line of Joe Giordano with TD Cowen. Please proceed with your question.
Speaker #3: line of Joe Giordano with 3.5 to 4% in our
It's good to hear. Um,
[Analyst]: Hey, good morning, guys. I wanted to ask on memory. Obviously, prices are up a ton, and I believe there'd be applicability for you guys having to buy that across whether it's instrumentation or T&M and elements of digital imaging. So can you comment on what you're seeing there, how big a percentage of sales it is, and how effective you've been able to pass that through to people?
Joseph Giordano: Hey, good morning, guys. I wanted to ask on memory. Obviously, prices are up a ton, and I believe there'd be applicability for you guys having to buy that across whether it's instrumentation or T&M and elements of digital imaging. So can you comment on what you're seeing there, how big a percentage of sales it is, and how effective you've been able to pass that through to people?
Curious I guess 2 more for me 1, can you just run us through the organic kind of by segment what you're thinking for next year? And then I also like a bigger picture. Do you think it has been talked from the government about restricting defense companies? And what they can do with their balance sheets and how they send their money. Um, do you see yourself? I think I know your answer, but do you see yourself in that population of companies, that would be, uh, potentially targeted there and if no does it?
Robert Mehrabian: Yeah. Thanks, Joe. First, we don't see a risk, net risk, in that area. Some of our businesses, as you said, specifically more geared towards test and measurement instrumentation, do use memory and may have some constraints in supply cost inflation. Ironically, memory and storage suppliers are also reasonably large customers of our test and measurement instrumentation businesses. So if they spend incremental CapEx for memories, then that's generally good for us because that's a higher margin contribution business for us. But coming back to what I summarized, net risk is not there.
Robert Mehrabian: Yeah. Thanks, Joe. First, we don't see a risk, net risk, in that area. Some of our businesses, as you said, specifically more geared towards test and measurement instrumentation, do use memory and may have some constraints in supply cost inflation.
Does it make you want to do things that others can't because you have less restrictions. Thank you.
Uh, yeah, well let me tell you.
You've never been.
Ironically, memory and storage suppliers are also reasonably large customers of our test and measurement instrumentation businesses. So if they spend incremental CapEx for memories, then that's generally good for us because that's a higher margin contribution business for us. But coming back to what I summarized, net risk is not there.
Driven to you. Anyways, as I said, uh, our preference is buying companies and investing in our businesses, but let me go back. Uh, tudeen. I said we've rarely bought our shares back. So 1.2 billion in share BuyBacks over the 26 year. History is not a whole lot, considering we generate that much cash in the last 2 years. Every year. Having said that
We've never paid the dividend.
Just last year we increased our capex by 40%.
[Analyst]: That's good to hear. I guess two more from me. One, can you just run us through the organic kind of by segment, what you're thinking for next year? And then I also like a bigger picture. Do you think there's been talk from the government about restricting defense companies and what they can do with their balance sheets and how they spend their money? Do you see yourself, I think I know your answer, but do you see yourself in that population of companies that would be potentially targeted there? And if no, does it make you want to do things that others can't because you have less restrictions? Thank you.
Joseph Giordano: That's good to hear. I guess two more from me. One, can you just run us through the organic kind of by segment, what you're thinking for next year? And then I also like a bigger picture. Do you think there's been talk from the government about restricting defense companies and what they can do with their balance sheets and how they spend their money?
And we increased our R&D spending by 10%. So if we can't find really good Acquisitions even though last year was a good year for Acquisitions, we invest in capex and R&D, and we're going to do that moving forward. The pockets of our businesses that are performing really well. Uh and like where we Supply uh
Do you see yourself, I think I know your answer, but do you see yourself in that population of companies that would be potentially targeted there? And if no, does it make you want to do things that others can't because you have less restrictions? Thank you.
Cool down and cooled infrared, sensors and cameras to our various customers will increase more capex. Having said all of that,
Robert Mehrabian: Yeah. Well, let me tell you, we've never been driven by what others do anyways. As I said, our preference is buying companies and investing in our businesses. But let me go back. Teledyne, as I said, we've rarely bought our shares back. So $1.2 billion in share buybacks over a 26-year history is not a whole lot considering we generate that much cash in the last two years every year. Having said that, we've never paid a dividend. And we're more concerned about investing. If we can't buy companies, we're more inclined to invest in our businesses. For example, just last year, we increased our CapEx by 40%, and we increased our R&D spending by 10%. So if we can't find really good acquisitions, even though last year was a good year for acquisitions, we invest in CapEx and R&D. And we're going to do that moving forward.
Robert Mehrabian: Yeah. Well, let me tell you, we've never been driven by what others do anyways. As I said, our preference is buying companies and investing in our businesses. But let me go back. Teledyne, as I said, we've rarely bought our shares back. So $1.2 billion in share buybacks over a 26-year history is not a whole lot considering we generate that much cash in the last two years every year.
we've always been a commercial company. Albeit, we do have significant defense businesses, can go as high as 30%, but overall, also most of our defense businesses are fixed price businesses. I don't think it really applies to us, uh,
But nevertheless, uh, since we don't buy a lot of our own stock, I don't think, uh, I'm so concerned about that.
Uh, you asked about Revenue.
Speaker #1: that much cash in the last two years
Organic.
Having said that, we've never paid a dividend. And we're more concerned about investing. If we can't buy companies, we're more inclined to invest in our businesses. For example, just last year, we increased our CapEx by 40%, and we increased our R&D spending by 10%. So if we can't find really good acquisitions, even though last year was a good year for acquisitions, we invest in CapEx and R&D. And we're going to do that moving forward.
With, we believe, uh, organic Revenue growth. I mentioned this before, but I'll do it very quickly, uh, in digital imaging. It be about, uh, 3.5% overall. It be around that 3.5 3.6%, uh, Aerospace, and defense may be a little higher instruments would be around that. But we like the the fact that it's around 3 and a half to 4% in our various businesses, we don't expect any of our businesses to decline.
Speaker #1: CapEx and R&D. And we're going to do
Thanks, Robert.
Robert Mehrabian: There are pockets of our businesses that are performing really well. Like where we supply cooled and uncooled infrared sensors and cameras to our various customers, we'll increase more CapEx there. Having said all of that, we've always been a commercial company, albeit we do have significant defense businesses. Can go as high as 30%. But overall, most of our defense businesses are fixed-price businesses. I don't think it really applies to us. But nevertheless, since we don't buy a lot of our own stock, I don't think I'm so concerned about that. Now, you asked about revenue. Organic, we believe organic revenue growth. I mentioned this before, but I'll do it very quickly. In digital imaging, it'd be about 3.5%. Overall, it'd be around that, 3.5, 3.6%. Aerospace and defense may be a little higher. Instruments would be around that.
There are pockets of our businesses that are performing really well. Like where we supply cooled and uncooled infrared sensors and cameras to our various customers, we'll increase more CapEx there. Having said all of that, we've always been a commercial company, albeit we do have significant defense businesses. Can go as high as 30%. But overall, most of our defense businesses are fixed-price businesses.
Thank you. Our next question comes from the line of Alex Preston with Bank of America. Please proceed with your question.
Hey, good morning, thank you for taking the question. Um, I just wanted to touch on 737, it seems like we got some more certainty on rate increases at the end of 25. Um, just wondering if there's been any change to your thinking on docking into 26,
I don't think it really applies to us. But nevertheless, since we don't buy a lot of our own stock, I don't think I'm so concerned about that. Now, you asked about revenue. Organic, we believe organic revenue growth. I mentioned this before, but I'll do it very quickly. In digital imaging, it'd be about 3.5%. Overall, it'd be around that, 3.5, 3.6%. Aerospace and defense may be a little higher. Instruments would be around that.
Uh, I'll ask George to answer it. I don't think so, but George. Yeah, I would say no major change. And I would just keep in mind that, you know, our overall commercial Aviation business is only about 5% of the business. And only about a third of our Aviation business is OEM and only a portion of that is Boeing. So uh no no no major change.
Change there for us.
Got it. Appreciate the caller.
Thanks.
Thank you. Our next question comes from the line of Rob Jameson with vertical research Partners please, proceed with your question.
Robert Mehrabian: But we like the fact that it's around 3.5% to 4% in our various businesses. We don't expect any of our businesses to decline.
But we like the fact that it's around 3.5% to 4% in our various businesses. We don't expect any of our businesses to decline.
Hey guys, thanks for taking my questions. Uh next quarter just um quickly on tests and measurements just you know can you go through some of the demand drivers? There was that mostly the ethernet test. Again, that was driving the strength. And did you see any kind of improvements in some of the other end markets, that you serve that might be related to like Auto or anything like that, that you could, um, you know, provide Insight on
Speaker #1: various businesses. Ethernet—we don't expect
[Analyst]: Thanks, Robert.
Joseph Giordano: Thanks, Robert.
Robert Mehrabian: Sure.
Robert Mehrabian: Sure.
Operator: Thank you. Our next question comes from the line of Alex Preston with Bank of America. Please proceed with your question.
Operator: Thank you. Our next question comes from the line of Alex Preston with Bank of America. Please proceed with your question.
George Bobb: Hey, good morning. Thank you for taking the question. I just wanted to touch on 737. It seems like we got some more certainty on rate increases at the end of 2025. Just wondering if there's been any change to your thinking on destocking into 2026?
Alex Preston: Hey, good morning. Thank you for taking the question. I just wanted to touch on 737. It seems like we got some more certainty on rate increases at the end of 2025. Just wondering if there's been any change to your thinking on destocking into 2026?
Robert Mehrabian: I'll ask George to answer it. I don't think so. But George, yeah, I would say no major change. I would just keep in mind that our overall commercial aviation business is only about 5% of the business, and only about 1/3 of our aviation business is OEM, and only a portion of that is Boeing. So no major change there for us.
Robert Mehrabian: I'll ask George to answer it. I don't think so. But George,
George Bobb: yeah, I would say no major change. I would just keep in mind that our overall commercial aviation business is only about 5% of the business, and only about 1/3 of our aviation business is OEM, and only a portion of that is Boeing. So no major change there for us.
Yeah, I would say drop, uh, in the immediate future or oscilloscopes high-end specialty. Oscilloscopes are doing well and will continue to do so, both from the auto market, as well, as from motor control, and power control in the largest data centers. Uh, and also, we have, uh, a product, uh, a small company that generates, uh, internet, uh, uh, traffic capabilities. So we can simulate that and, uh, basically, you know, what's happened to the internet, uh, it's moving to the terabit range, 1.6 therapy to be accurate. Uh, we do have products in that domain and some of our
George Bobb: Got it. Appreciate the color.
Alex Preston: Got it. Appreciate the color.
Robert Mehrabian: Thanks, Joe.
George Bobb: Thanks, Joe.
Operator: Thank you. Our next question comes from the line of Robert Stallard with Vertical Research Partners. Please proceed with your question.
Operator: Thank you. Our next question comes from the line of Robert Stallard with Vertical Research Partners. Please proceed with your question.
[Analyst]: Hey, guys. Thanks for taking my questions. Next quarter, just quickly on test and measurement. Just can you go through some of the demand drivers there? Was that mostly the Ethernet test again that was driving the strength? And did you see any kind of improvements in some of the other end markets that you serve that might be related to auto or anything like that that you could provide insight on?
Robert Jamieson: Hey, guys. Thanks for taking my questions. Next quarter, just quickly on test and measurement. Just can you go through some of the demand drivers there? Was that mostly the Ethernet test again that was driving the strength? And did you see any kind of improvements in some of the other end markets that you serve that might be related to auto or anything like that that you could provide insight on?
Robert Mehrabian: Yeah. I would say, Rob, in the immediate future, our oscilloscopes, high-end specialty oscilloscopes, are doing well and will continue to do so, both from the auto market as well as from motor control and power control in the larger data centers. Also, we have a product, a small company that generates Ethernet traffic capability, so we can simulate that. Basically, you know what's happened to the Ethernet. It's moving to the terabit range, 1.6 terabit to be accurate. We do have products in that domain. In some of our protocol analyzer business, we expect a little slower start in 2026, primarily because that business is very dependent on where the large suppliers issue or produce chips. Before they produce their chips, they use our protocol analyzers, the engineers to develop the chips. But until they issue the chips, the users don't buy our protocol analyzers.
Robert Mehrabian: Yeah. I would say, Rob, in the immediate future, our oscilloscopes, high-end specialty oscilloscopes, are doing well and will continue to do so, both from the auto market as well as from motor control and power control in the larger data centers. Also, we have a product, a small company that generates Ethernet traffic capability, so we can simulate that.
so,
Speaker #1: the immediate future, that, based on what we see,
that's the best answer I can give you.
No, that's helpful. Thank you for that. Um, and then just looking at some of the Legacy, um, you know, Machine Vision and um, CMOS x-rays, uh, businesses and digital imaging, you know, are there any, um, you know, if you see the Machine Vision, business starting to recover, and you don't expect that to be negative this year. Um, are there any particular unmarked or exposures there, uh, where you'd expect the most upside? Um, and then I guess, on the X-ray, Sema.
Um, sensors business.
Basically, you know what's happened to the Ethernet. It's moving to the terabit range, 1.6 terabit to be accurate. We do have products in that domain. In some of our protocol analyzer business, we expect a little slower start in 2026, primarily because that business is very dependent on where the large suppliers issue or produce chips. Before they produce their chips, they use our protocol analyzers, the engineers to develop the chips. But until they issue the chips, the users don't buy our protocol analyzers.
Speaker #1: accurate.
You know, just some of the commentary that we've seen recently from, um, dense play, uh, that you know, they're expecting recovery in sales in the second half of 26. Just kind of align with. Um, I know you talked about seasonality in the second half, but would you continue to expect like a sequential Improvement for the medical portions within di as we move through 2026?
Uh, I'll I'll ask George to pick that up, please. Uh, but in general, let's say, uh, uh,
we're we're going to do okay in the Machine Vision domain
uh,
Because of masks ON Semiconductor inspection Etc. I'll let the X-ray for George to comment on
Robert Mehrabian: So there's a little gap in that domain with the two major producers of chips having delayed things. But as we move into the year, that'll even itself out. So that's the best answer I can give you.
So there's a little gap in that domain with the two major producers of chips having delayed things. But as we move into the year, that'll even itself out. So that's the best answer I can give you.
Yeah, I would also just add on the, uh, on the Machine Vision side. We saw good single-digit growth in both Machine Vision, cameras, and Machine Vision sensors in Q4.
[Analyst]: No, that's helpful. Thank you for that. And then just looking at some of the legacy machine vision and CMOS X-ray businesses and digital imaging, are there any—as you see the machine vision business starting to recover and you don't expect that to be negative this year, are there any particular end markets or exposures there where you'd expect the most upside? And then I guess on the X-ray CMOS sensors business, just some of the commentary that we've seen recently from Dentsply that they're expecting recovering sales in the second half of 2026, just kind of aligned with—I know you talked about seasonality in the second half, but would you continue to expect a sequential improvement for the medical portions within DI as we move through 2026?
Robert Jamieson: No, that's helpful. Thank you for that. And then just looking at some of the legacy machine vision and CMOS X-ray businesses and digital imaging, are there any—as you see the machine vision business starting to recover and you don't expect that to be negative this year, are there any particular end markets or exposures there where you'd expect the most upside?
And we expect in that overall industrial and scientific Vision to be up kind of low single digits in 2026. So we, we were certainly seeing the recovery there. And as Robert mentioned that's areas like semiconductor mask and wafer inspection uh and the inspection of electronic components
On the X-ray side. Uh really we we're kind of anticipating flat year-over-year in in 2026, we have we have not built in a, a recovery in that business in 2026.
Okay, thank you for that, appreciate it.
And then I guess on the X-ray CMOS sensors business, just some of the commentary that we've seen recently from Dentsply that they're expecting recovering sales in the second half of 2026, just kind of aligned with—I know you talked about seasonality in the second half, but would you continue to expect a sequential improvement for the medical portions within DI as we move through 2026?
Thank you, ladies and gentlemen that concludes our question and answer session, I'll turn the floor back to management for final comments.
Speaker #13: second half, but would
Uh, thank you very much operator. I'll now ask Jason to conclude our conference call. Thanks Robert. And again, thanks everyone for joining us today. And of course, if you have follow-up questions, my number is on the earnings release and other news releases are available on our website.
So thanks everyone. Talk to you later. Bye bye.
Robert Mehrabian: I'll ask George to pick that up, please. But in general, I'd say we're going to do okay in the machine vision domain because of mask and semiconductor inspection, etc. I'll let the X-ray for George to comment on.
Robert Mehrabian: I'll ask George to pick that up, please. But in general, I'd say we're going to do okay in the machine vision domain because of mask and semiconductor inspection, etc. I'll let the X-ray for George to comment on.
Thank you, this concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.
[Analyst]: Yeah. I would also just add on the machine vision side, we saw good single-digit growth in both machine vision cameras and machine vision sensors in Q4. And we expect in that overall industrial and scientific vision to be up kind of low single digits in 2026. So we were certainly seeing the recovery there. And as Robert mentioned, that's areas like semiconductor mask and wafer inspection and the inspection of electronic components. On the X-ray side, really, we're kind of anticipating flat year over year in 2026. We have not built in a recovery in that business in 2026.
George Bobb: Yeah. I would also just add on the machine vision side, we saw good single-digit growth in both machine vision cameras and machine vision sensors in Q4. And we expect in that overall industrial and scientific vision to be up kind of low single digits in 2026. So we were certainly seeing the recovery there.
And as Robert mentioned, that's areas like semiconductor mask and wafer inspection and the inspection of electronic components. On the X-ray side, really, we're kind of anticipating flat year over year in 2026. We have not built in a recovery in that business in 2026.
Speaker #11: semiconductor mask and wafer
[Analyst]: Okay. Thank you for that. Appreciate it.
Robert Jamieson: Okay. Thank you for that. Appreciate it.
Speaker #3: Thank you.
Operator: Thank you. Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to management for final comments.
Operator: Thank you. Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to management for final comments.
Robert Mehrabian: Thank you very much, operator. I'll now ask Jason to conclude our conference call.
Robert Mehrabian: Thank you very much, operator. I'll now ask Jason to conclude our conference call.
Jason VanWees: Thanks, Robert. And again, thanks everyone for joining us today. And of course, if you have follow-up questions, my number is on the earnings release. And other news releases are available on our website. So thanks everyone. Talk to you later. Bye-bye.
Jason VanWees: Thanks, Robert. And again, thanks everyone for joining us today. And of course, if you have follow-up questions, my number is on the earnings release. And other news releases are available on our website. So thanks everyone. Talk to you later. Bye-bye.
Operator: Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.
Operator: Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.
