THOUSAND OAKS, Calif.--(BUSINESS WIRE)--
Teledyne Technologies Incorporated (TDY)
-
All-time record quarterly sales of $622.3 million increased 4.3%
compared to last year
-
All-time record quarterly earnings per share of $1.62 increased
12.5%
-
Full-year earnings per share of $5.75 increased 18.1%
-
Full-year free cash flow of $240.2 million
-
Acquired Bolt Technology Corporation and assets of The Oceanscience
Group Ltd.
-
Newly authorized stock repurchase program to repurchase up to an
additional 2,500,000 shares
Teledyne today reported fourth quarter 2014 sales of $622.3 million,
compared with sales of $596.6 million for the fourth quarter of 2013, an
increase of 4.3%. Net income attributable to Teledyne was $60.2 million
($1.62 per diluted share) for the fourth quarter of 2014, compared with
$54.9 million ($1.44 per diluted share) for the fourth quarter of 2013,
an increase of 9.7%. The fourth quarters of 2014 and 2013 reflected
pretax charges of $1.8 million and $5.3 million for severance and
facility consolidation expenses, respectively. The fourth quarters of
2014 and 2013 also reflected net discrete tax benefits totaling $0.7
million and $6.1 million, respectively. The fourth quarter of 2014
included $5.6 million in research and development tax credits.
“Given the strength and diversity of Teledyne’s businesses and our
consistent focus on operational excellence, we were able to achieve our
thirteenth consecutive year of GAAP earnings growth,” said Robert
Mehrabian, Chairman, President and Chief Executive Officer.
“Furthermore, we ended 2014 with a very strong quarter, with sales,
operating margin and earnings per share all at record levels. Total
operating margin increased 220 basis points and resulted from greater
profit and margin in all business segments. Finally, robust cash flow in
2014 allowed us to complete acquisitions as well as stock repurchases,
while maintaining a healthy balance sheet.”
Full Year 2014
Total year sales for 2014 were $2,394.0 million, compared with $2,338.6
million for 2013,an increase of 2.4%. Net income attributable to
Teledyne was $217.7 million ($5.75 per diluted share) for 2014, compared
with net income attributable to Teledyne of $185.0 million ($4.87 per
diluted share) for 2013,an increase of 17.7%. Total year 2014
and 2013 reflected pretax charges totaling $4.4 million and $24.0
million, respectively, for severance and facility consolidation
expenses. Net income for 2014 and 2013 also included net discrete tax
benefits of $8.9 million and $21.3 million, respectively. Total year
2014 included $5.6 million in research and development tax credits.
Review of Operations (Comparisons are with the fourth quarter of
2013, unless noted otherwise.)
Instrumentation
The Instrumentation segment’s fourth quarter 2014 sales were $299.6
million, compared with $275.8 million, an increase of 8.6%. Fourth
quarter 2014 operating profit was $53.4 million, compared with $44.4
million, an increase of 20.3%.
The fourth quarter 2014 sales increase resulted from higher sales in the
marine instrumentation and environmental instrumentation product lines
and flat sales of electronic test and measurement instrumentation. The
higher sales of $20.6 million for marine instrumentation reflected $10.6
million in incremental sales from recent acquisitions, including Bolt
Technology Corporation, as well as increased sales of interconnect
systems used in offshore energy production, partially offset by reduced
sales of geophysical sensors for oil and gas exploration. Sales for
environmental instrumentation increased $3.2 million. The increase in
operating profit reflected the impact of higher sales, as well as
aggregate margin improvement from businesses acquired within the last
two years. The fourth quarter of 2014 reflected $0.5 million in
acquisition related expenses. The fourth quarter of 2013 reflected $1.2
million in severance and facility consolidation expenses.
Digital Imaging
The Digital Imaging segment’s fourth quarter 2014 sales were $102.4
million, compared with $102.9 million, a decrease of 0.5%. Operating
profit was $7.8 million for the fourth quarter of 2014, compared with
$3.6 million, an increase of 116.7%.
Fourth quarter 2014 sales primarily reflected lower sales of specialty
imaging sensors, mostly offset by higher sales of LIDAR systems and MEMS
production. Operating profit in 2014 primarily reflected higher margins
for LIDAR systems and MEMS production, as well as infrared imaging
sensors. Operating profit in the fourth quarters of 2014 and 2013
reflected $1.5 million and $1.6 million in severance and related
expenses, respectively. Operating profit in the fourth quarter of 2013
also reflected a $1.2 million asset writedown.
Aerospace and Defense Electronics
The Aerospace and Defense Electronics segment’s fourth quarter 2014
sales were $145.7 million, compared with $149.4 million, a decrease of
2.5%. Operating profit was $20.0 million for the fourth quarter of 2014,
compared with $15.6 million, an increase of 28.2%.
The fourth quarter 2014 sales decrease reflected lower sales of $6.0
million from microwave and interconnect systems and $1.2 million from
electronic manufacturing services products, partially offset by higher
sales of $3.5 million from avionics products and electronic relays.
Operating profit in the fourth quarter of 2014 reflected pension income
of $0.2 million compared with $1.9 million of pension expense and the
fourth quarter of 2014 included $0.2 million in severance and facility
consolidation expenses compared with $3.5 million, partially offset by
the impact of lower sales.
Engineered Systems
The Engineered Systems segment’s fourth quarter 2014 sales were $74.6
million compared with $68.5 million, an increase of 8.9%. Operating
profit was $10.0 million for the fourth quarter of 2014, compared with
$7.2 million, an increase of 38.9%.
The fourth quarter 2014 sales increase reflected higher sales of turbine
engines of $2.6 million and higher sales of engineered products and
services of $2.3 million, which primarily reflected higher sales of
marine and space manufacturing programs. The higher turbine engine sales
reflected increase sales for the Joint Air-to-Surface Standoff Missile
(“JASSM”) turbine engine program. Sales of energy systems products
increased $1.2 million. Operating profit in the fourth quarter of 2014
reflected the impact of higher sales and included pension income of $0.4
million compared with $1.7 million of pension expense.
Additional Financial Information
Cash Flow
Cash provided by operating activities was $84.1 million for the fourth
quarter of 2014, compared with $98.5 million. The lower cash provided by
operating activities in the fourth quarter of 2014 reflected the impact
of higher income tax payments, partially offset by higher net income and
the timing of accounts receivable collections. Free cash flow (cash
provided by operating activities less capital expenditures) was $70.3
million for the fourth quarter of 2014, compared with $79.9 million and
reflected lower cash provided by operating activities, partially offset
by lower capital expenditures. At December 28, 2014, total debt was
$705.1 million, which included $105.0 million drawn on the $750.0
million credit facility. In December 2014, the company issued $125.0
million of senior unsecured notes which consisted of $30.0 million of
2.61% senior unsecured notes due December 2019, and $95.0 million of
3.09% senior unsecured notes due December 2021. Cash and cash
equivalents were $141.4 million at December 28, 2014. The company
received $4.1 million from the exercise of stock options in the fourth
quarter of 2014, compared with $2.1 million. Capital expenditures for
the fourth quarter of 2014 were $13.8 million, compared with $18.6
million. Depreciation and amortization expense for the fourth quarter of
2014 was $24.2 million, compared with $24.0 million. On November 18,
2014, the company acquired all of the outstanding common shares of Bolt
Technology Corporation (“Bolt”) for $22.00 per share payable in cash.
The aggregate value for the transaction was approximately $171.0
million, excluding transaction costs and taking into account Bolt’s
stock options and net cash on hand. On October 23, 2014, a subsidiary of
Teledyne acquired assets of The Oceanscience Group Ltd. for $15.0
million. On January 27, 2015, Teledyne’s Board of Directors authorized a
stock repurchase program for up to an additional 2,500,000 shares of
Teledyne common stock. A total of 342,148 shares of Teledyne common
stock also remains available for repurchase under the company’s prior
authorization.
|
|
|
|
|
|
Free Cash Flow (a)
|
|
Fourth Quarter
|
|
|
Total Year
|
(in millions, brackets indicate use of funds)
|
|
2014
|
|
|
|
2013
|
|
|
|
2014
|
|
|
|
2013
|
|
Cash provided by operating activities
|
|
$
|
84.1
|
|
|
|
$
|
98.5
|
|
|
|
$
|
283.7
|
|
|
|
$
|
204.1
|
|
Capital expenditures for property, plant and equipment
|
|
(13.8
|
)
|
|
|
(18.6
|
)
|
|
|
(43.5
|
)
|
|
|
(72.6
|
)
|
Free cash flow
|
|
70.3
|
|
|
|
79.9
|
|
|
|
240.2
|
|
|
|
131.5
|
|
Pension contributions, net of tax (b)
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
51.4
|
|
Adjusted free cash flow (net cash used)
|
|
$
|
70.3
|
|
|
|
$
|
79.9
|
|
|
|
$
|
240.2
|
|
|
|
$
|
182.9
|
|
(a) The company defines free cash flow as cash provided by
operating activities (a measure prescribed by generally accepted
accounting principles) less capital expenditures for property,
plant and equipment. Adjusted free cash flow eliminates the impact
of pension contributions on a net of tax basis. The company
believes that this supplemental non-GAAP information is useful to
assist management and the investment community in analyzing the
company’s ability to generate cash flow, including the impact of
voluntary and required pension contributions.
|
|
Pension
Pension income was $0.3 million for the fourth quarter of 2014 compared
with pension expense of $4.5 million. The change to pension income in
2014 from pension expense in 2013 primarily reflected the impact of
using a 5.4% discount rate to determine the benefit obligation for the
domestic plan in 2014 compared with a 4.4% discount rate used in 2013.
Pension expense allocated to contracts pursuant to U.S. Government Cost
Accounting Standards (“CAS”) was $3.5 million for the fourth quarter of
2014 compared with $3.7 million. Pension expense determined allowable
under CAS can generally be recovered through the pricing of products and
services sold to the U.S. Government.
Income Taxes
The effective tax rate for the fourth quarter of 2014 was 20.9% compared
with 14.9%. The fourth quarter of 2014 reflected net discrete tax
benefits of $0.7 million compared with $6.1 million. Excluding the net
discrete tax benefits in both periods, the effective tax rates would
have been 21.8% and 24.4% for the fourth quarter of 2014 and 2013,
respectively. On December 19, 2014, the Tax Increase Prevention Act of
2014 was signed into law. Among the extended provisions are the Federal
research and development credit and the Subpart F controlled foreign
corporation look through exception. Since a change in tax law is
accounted for in the period of enactment, approximately $5.6 million of
related tax benefit was recognized in the fourth quarter of 2014.
Stock Option Compensation Expense
For the fourth quarter of 2014, the company recorded a total of $3.9
million in stock option expense, of which $2.6 million was recorded in
the operating segment results and $1.4 million was recorded as corporate
expense. For the fourth quarter of 2013, the company recorded a total of
$3.1 million in stock option expense, of which $2.2 million was recorded
in the operating segment results and $0.9 million was recorded as
corporate expense.
Other
Interest expense, net of interest income, was $5.1 million for the
fourth quarter of 2014, compared with $4.8 million, and primarily
reflected higher average debt levels, due to recent acquisitions.
Corporate expense was $11.3 million for the fourth quarter of 2014,
compared with $7.3 million, and reflected higher compensation and
professional fees expense. Other income and expense was $0.4 million of
expense for the fourth quarter of 2014 compared with income of $5.3
million for the fourth quarter of 2013. The 2013 amount included $3.6
million from the reversal of reserves no longer needed in connection
with a legal settlement.
Outlook
Based on its current outlook, the company’s management believes that
first quarter 2015 earnings per diluted share will be in the range of
approximately $1.16 to $1.20 and the full year 2015 earnings per diluted
share outlook is expected to be in the range of approximately $5.71 to
$5.76. The company’s effective tax rate for 2015 is expected to be
29.5%, before discrete items. For the company’s domestic pension plan,
the discount rate for 2015 will decrease to 4.5% from 5.4%.
Forward-Looking Statements Cautionary Notice
This press release contains forward-looking statements, as defined in
the Private Securities Litigation Reform Act of 1995, relating to
earnings, growth opportunities, acquisitions, product sales, capital
expenditures, pension matters, stock option compensation expense, stock
repurchases, interest expense, taxes, exchange rate fluctuations and
strategic plans. Forward-looking statements are generally accompanied by
words such as “estimate”, “project”, “predict”, “believes” or “expect”,
that convey the uncertainty of future events or outcomes. All statements
made in this press release that are not historical in nature should be
considered forward-looking.
Actual results could differ materially from these forward-looking
statements. Many factors could change the anticipated results,
including: disruptions in the global economy; changes in demand for
products sold to the defense electronics, instrumentation, digital
imaging, energy exploration and production, commercial aviation,
semiconductor and communications markets; funding, continuation and
award of government programs; cuts to defense spending resulting from
existing and future deficit reduction measures; and threats to the
security of our confidential and proprietary information, including
cyber security threats. Lower oil and natural gas prices, as well as
instability in the Middle East or other oil producing regions, and new
regulations or restrictions relating to energy production, including
with respect to hydraulic fracturing, could negatively affect the
company’s businesses that supply the oil and gas industry. Increasing
fuel costs could negatively affect the markets of our commercial
aviation businesses. In addition, financial market fluctuations affect
the value of the company’s pension assets.
Changes in the policies of U.S. and foreign governments, including
economic sanctions, could result, over time, in reductions or
realignment in defense or other government spending and further changes
in programs in which the company participates.
While the company’s growth strategy includes possible acquisitions, we
cannot provide any assurance as to when, if or on what terms any
acquisitions will be made. Acquisitions involve various inherent risks,
such as, among others, our ability to integrate acquired businesses,
retain customers and achieve identified financial and operating
synergies. There are additional risks associated with acquiring, owning
and operating businesses internationally, including those arising from
U.S. and foreign policy changes and exchange rate fluctuations.
While the company believes its internal and disclosure control systems
are effective, there are inherent limitations in all control systems,
and misstatements due to error or fraud may occur and may not be
detected.
Readers are urged to read the company’s periodic reports filed with the
Securities and Exchange Commission (“SEC”) for a more complete
description of the company, its businesses, its strategies and the
various risks that the company faces. Various risks are identified in
Teledyne’s 2013 Annual Report on Form 10-K and subsequent Quarterly
Reports on Form 10-Q. The company assumes no duty to publicly update or
revise any forward-looking statements, whether as a result of new
information or otherwise.
A live webcast of Teledyne’s fourth quarter earnings conference call
will be held at 11:00 a.m. (Eastern) on Thursday, January 29, 2015. To
access the call, go to www.teledyne.com
approximately ten minutes before the scheduled start time. A replay will
also be available for one month starting at 12:00 p.m. (Eastern) on
Thursday, January 29, 2015.
|
TELEDYNE TECHNOLOGIES INCORPORATED
|
CONSOLIDATED STATEMENTS OF INCOME
|
FOR THE FOURTH QUARTER AND YEAR ENDED
|
DECEMBER 28, 2014 AND DECEMBER 29, 2013
|
(Unaudited - in millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter
|
|
Fourth Quarter
|
|
Total Year
|
|
Total Year
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
Net sales
|
|
$
|
622.3
|
|
|
$
|
596.6
|
|
|
$
|
2,394.0
|
|
|
$
|
2,338.6
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of sales
|
|
391.6
|
|
|
382.0
|
|
|
1,487.1
|
|
|
1,500.0
|
|
Selling, general and administrative expenses
|
|
150.8
|
|
|
151.1
|
|
|
612.4
|
|
|
598.3
|
|
Total costs and expenses
|
|
542.4
|
|
|
533.1
|
|
|
2,099.5
|
|
|
2,098.3
|
|
Operating income
|
|
79.9
|
|
|
63.5
|
|
|
294.5
|
|
|
240.3
|
|
Other income/(expense), net
|
|
(0.4
|
)
|
|
5.3
|
|
|
6.6
|
|
|
4.1
|
|
Interest and debt expense, net
|
|
(5.1
|
)
|
|
(4.8
|
)
|
|
(19.0
|
)
|
|
(20.4
|
)
|
Income before income taxes
|
|
74.4
|
|
|
64.0
|
|
|
282.1
|
|
|
224.0
|
|
Provision for income taxes
|
|
15.5
|
|
|
9.5
|
|
|
66.5
|
|
|
39.5
|
|
Net income
|
|
58.9
|
|
|
54.5
|
|
|
215.6
|
|
|
184.5
|
|
Noncontrolling interest
|
|
1.3
|
|
|
0.4
|
|
|
2.1
|
|
|
0.5
|
|
Net income attributable to Teledyne
|
|
$
|
60.2
|
|
|
$
|
54.9
|
|
|
$
|
217.7
|
|
|
$
|
185.0
|
|
Diluted earnings per common share
|
|
$
|
1.62
|
|
|
$
|
1.44
|
|
|
$
|
5.75
|
|
|
$
|
4.87
|
|
Weighted average diluted common shares outstanding
|
|
37.2
|
|
|
38.2
|
|
|
37.9
|
|
|
38.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TELEDYNE TECHNOLOGIES INCORPORATED
|
SUMMARY OF SEGMENT NET SALES AND OPERATING PROFIT
|
FOR THE FOURTH QUARTER AND YEAR ENDED
|
DECEMBER 28, 2014 AND DECEMBER 29, 2013
|
(Unaudited - in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter
|
|
|
Fourth Quarter
|
|
|
% Change
|
|
|
Total Year
|
|
|
Total Year
|
|
|
% Change
|
|
|
2014
|
|
|
|
2013
|
|
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Instrumentation
|
|
$
|
299.6
|
|
|
|
$
|
275.8
|
|
|
|
8.6
|
%
|
|
|
$
|
1,115.5
|
|
|
|
$
|
1,022.8
|
|
|
|
9.1
|
%
|
Digital Imaging
|
|
102.4
|
|
|
|
102.9
|
|
|
|
(0.5
|
)%
|
|
|
403.6
|
|
|
|
414.8
|
|
|
|
(2.7
|
)%
|
Aerospace and Defense Electronics
|
|
145.7
|
|
|
|
149.4
|
|
|
|
(2.5
|
)%
|
|
|
603.0
|
|
|
|
625.1
|
|
|
|
(3.5
|
)%
|
Engineered Systems
|
|
74.6
|
|
|
|
68.5
|
|
|
|
8.9
|
%
|
|
|
271.9
|
|
|
|
275.9
|
|
|
|
(1.4
|
)%
|
Total net sales
|
|
$
|
622.3
|
|
|
|
$
|
596.6
|
|
|
|
4.3
|
%
|
|
|
$
|
2,394.0
|
|
|
|
$
|
2,338.6
|
|
|
|
2.4
|
%
|
Segment operating profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Instrumentation
|
|
$
|
53.4
|
|
|
|
$
|
44.4
|
|
|
|
20.3
|
%
|
|
|
$
|
181.6
|
|
|
|
$
|
162.0
|
|
|
|
12.1
|
%
|
Digital Imaging
|
|
7.8
|
|
|
|
3.6
|
|
|
|
116.7
|
%
|
|
|
37.1
|
|
|
|
28.2
|
|
|
|
31.6
|
%
|
Aerospace and Defense Electronics
|
|
20.0
|
|
|
|
15.6
|
|
|
|
28.2
|
%
|
|
|
88.3
|
|
|
|
65.7
|
|
|
|
34.4
|
%
|
Engineered Systems
|
|
10.0
|
|
|
|
7.2
|
|
|
|
38.9
|
%
|
|
|
31.4
|
|
|
|
22.0
|
|
|
|
42.7
|
%
|
Segment operating profit
|
|
91.2
|
|
|
|
70.8
|
|
|
|
28.8
|
%
|
|
|
338.4
|
|
|
|
277.9
|
|
|
|
21.8
|
%
|
Corporate expense
|
|
(11.3
|
)
|
|
|
(7.3
|
)
|
|
|
54.8
|
%
|
|
|
(43.9
|
)
|
|
|
(37.6
|
)
|
|
|
16.8
|
%
|
Operating income
|
|
79.9
|
|
|
|
63.5
|
|
|
|
25.8
|
%
|
|
|
294.5
|
|
|
|
240.3
|
|
|
|
22.6
|
%
|
Other income/(expense), net
|
|
(0.4
|
)
|
|
|
5.3
|
|
|
|
*
|
|
|
6.6
|
|
|
|
4.1
|
|
|
|
61.0
|
%
|
Interest and debt expense, net
|
|
(5.1
|
)
|
|
|
(4.8
|
)
|
|
|
6.3
|
%
|
|
|
(19.0
|
)
|
|
|
(20.4
|
)
|
|
|
(6.9
|
)%
|
Income before income taxes
|
|
74.4
|
|
|
|
64.0
|
|
|
|
16.3
|
%
|
|
|
282.1
|
|
|
|
224.0
|
|
|
|
25.9
|
%
|
Provision for income taxes
|
|
15.5
|
|
|
|
9.5
|
|
|
|
63.2
|
%
|
|
|
66.5
|
|
|
|
39.5
|
|
|
|
68.4
|
%
|
Net income
|
|
58.9
|
|
|
|
54.5
|
|
|
|
8.1
|
%
|
|
|
215.6
|
|
|
|
184.5
|
|
|
|
16.9
|
%
|
Noncontrolling interest
|
|
1.3
|
|
|
|
0.4
|
|
|
|
225.0
|
%
|
|
|
2.1
|
|
|
|
0.5
|
|
|
|
320.0
|
%
|
Net income attributable to Teledyne
|
|
$
|
60.2
|
|
|
|
$
|
54.9
|
|
|
|
9.7
|
%
|
|
|
$
|
217.7
|
|
|
|
$
|
185.0
|
|
|
|
17.7
|
%
|
* not meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TELEDYNE TECHNOLOGIES INCORPORATED
|
CONSOLIDATED CONDENSED BALANCE SHEETS
|
(Current period unaudited – in millions)
|
|
|
|
|
|
|
|
|
|
|
|
December 28, 2014
|
|
|
|
December 29, 2013
|
ASSETS
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
141.4
|
|
|
|
$
|
66.0
|
Accounts receivable, net
|
|
400.7
|
|
|
|
378.0
|
Inventories, net
|
|
311.8
|
|
|
|
294.3
|
Prepaid expenses and other current assets
|
|
87.8
|
|
|
|
60.8
|
Total current assets
|
|
941.7
|
|
|
|
799.1
|
Property, plant and equipment, net
|
|
336.5
|
|
|
|
357.7
|
Goodwill and acquired intangible assets, net
|
|
1,431.8
|
|
|
|
1,308.7
|
Prepaid pension asset
|
|
86.3
|
|
|
|
222.0
|
Other assets, net
|
|
69.5
|
|
|
|
63.6
|
Total assets
|
|
$
|
2,865.8
|
|
|
|
$
|
2,751.1
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
162.5
|
|
|
|
$
|
147.5
|
Accrued liabilities
|
|
290.3
|
|
|
|
267.1
|
Current portion of long-term debt and capital leases
|
|
86.2
|
|
|
|
3.5
|
Total current liabilities
|
|
539.0
|
|
|
|
418.1
|
Long-term debt and capital lease obligations
|
|
618.9
|
|
|
|
549.0
|
Other long-term liabilities
|
|
239.4
|
|
|
|
265.3
|
Total liabilities
|
|
1,397.3
|
|
|
|
1,232.4
|
Total stockholders’ equity
|
|
1,468.5
|
|
|
|
1,518.7
|
Total liabilities and stockholders’ equity
|
|
$
|
2,865.8
|
|
|
|
$
|
2,751.1
|
|
|
|
|
|
|
|
|
|