Teledyne Technologies (TDY) Q4 Earnings & Sales Top Estimates

Teledyne Technologies Inc. (NYSE:TDY) reported adjusted fourth-quarter 2018 earnings of $2.33 per share, which surpassed the Zacks Consensus Estimate of $2.19 by 6.4%. The bottom line also improved 27.3% from the year-ago quarter’s figure of $1.83.

Excluding one-time adjustments of $4.4 million, the company reported GAAP earnings of $2.45 per share, mirroring 33.2% year-over-year improvement from $1.84 registered in the prior-year quarter.

The year-over-year bottom-line growth can be attributed to impressive sales figure as well as rise in operating income that Teledyne witnessed in the reported quarter.

GAAP earnings came in at $9.01 per share during 2018, reflecting an increase of 46.9% from $6.26 a year ago.

Operational Highlights

In the reported quarter, total sales amounted to $748.4 million, which exceeded the Zacks Consensus Estimate of $728 million by 2.8%. The top line also increased 6.2% from $704.4 a year ago. Notably, all segments registered a solid year-over-year sales growth in the fourth quarter.

Teledyne generated sales worth $2,901.8 million in 2018, which outpaced the prior-year figure of $2,603.8 million by 11.4%.

Segmental Performance

Instrumentation: Sales at this segment rose 3.4% year over year to $263.4 million in the fourth quarter. Increased sales of test and measurement instrumentation and environmental instrumentation led to the upside.

Operating income surged 40.1% year over year to $43 million on account of improved sales and higher margins across most product lines.

Digital Imaging: Quarterly sales at this division increased 9.3% year over year to $225.9 million. The improvement can be attributed to increased sales of X-ray detectors and generators for life sciences applications and MEMS products.

Operating income grew 3.3% year over year to $37.1 million backed by higher sales.

Aerospace and Defense Electronics: At this segment, quarterly sales of $178.3 million rose 2.8% from the prior-year quarter number owing to sales of defense electronics.

Operating income improved 7% year over year to $36.5 million driven by favorable product mix.

Engineered Systems: Sales at this division grew 16.3% year over year to about $80.8 million in the fourth quarter. The uptick was driven by higher sales of engineered products and services.

Operating income increased 6% to $8.8 million on account of solid sales growth.

Financial Condition

Teledyne’s cash totaled $142.5 million as of Dec 30, 2018, compared with $70.9 million at the end of 2017. Long-term debt and capital lease obligations summed $612.3 million compared with $1,069.3 million at 2017-end.

Cash from operations at the end of 2018 amounted to $446.9 million compared with $374.7 million at 2017-end.

In 2018, capital expenditures were $86.8 million compared with $58.5 million in the year-ago quarter. During the year, the company generated free cash flow of $360.1 million, reflecting 13.9% annual growth.

Guidance

Teledyne expects to generate GAAP earnings per share of $1.87-$1.92 and $9.25-$9.35 for first-quarter and full-year 2019, respectively. Currently, the Zacks Consensus Estimate for Teledyne’s full-year earnings is pegged at $9, lower than the company’s bottom-line predictions.

Zacks Rank

Teledyne carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Defense Releases

Here are some defense companies that you may want to consider as the Zacks model shows that these have the right combination of elements to post an earnings beat this quarter:

Lockheed Martin Corp. (NYSE:LMT) is expected to report fourth-quarter 2018 results on Jan 29. The company has an Earnings ESP of +4.20% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

L3 Technologies, Inc. (NYSE:LLL) is expected to report fourth-quarter 2018 results on Jan 29. The company has an Earnings ESP of +1.19% and a Zacks Rank #3.

Huntington Ingalls Industries, Inc. (NYSE:HII) is expected to report fourth-quarter 2018 results on Feb 14. The company has an Earnings ESP of +11.85% and a Zacks Rank #3.

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