Teledyne Technologies Inc. reported its second quarter financials last week and got a boost to its stock price as it beat Wall Street estimates on both earnings and revenue.
The shares of the Thousand Oaks aerospace, marine and digital imaging products manufacturer increased by nearly 4% on July 24 to $417 on the day it released its financials before the market opened. The stock had closed at $402.27 on the previous day.
The company reported on July 24 that it had adjusted net income of $219 million ($4.58 a share) for the quarter ending June 30, compared with adjusted net income of $224 million ($4.67) in the same period of the previous year. Revenue decreased by almost 4% from the second quarter of the prior year to $1.37 billion.
Analysts on average expected earnings of $4.49 on revenue of $1.36 billion, according to LSEG, a provider of financial markets data.
The stock closed at $415.70 on July 25 or about a fraction of a percent increase year over year.Â
Robert Mehrabian, executive chair of Teledyne, said that its earnings exceeded expectations, orders were greater than sales for the third consecutive quarter driven by aerospace and defense work and that the company ended the second quarter with a record backlog.
“Therefore, we are reasonably confident that quarterly sales will again increase sequentially, and we will return to year-over-year growth in the second half of 2024,” Mehrabian said in a statement.
During a conference call with analysts to discuss second quarter earnings, Mehrabian said the results were a testament to the strength of its balanced business portfolio.
“We also continued our proven strategy of increasing margins in those businesses that are growing while reasonably protecting margins in those businesses with more challenging markets,” Mehrabian said.
Guy Hardwick, an analyst with Freedom Capital Markets in New York, asked about the free cash flow issue and how the company will look back on this year in terms of how it spent that money, either on paying down debt, acquisitions or buying back stock.
Mehrabian said Teledyne’s debt payments are fixed and that there is only one payment of $150 million due in October.
“Other than that, our payments start in 2026. And if you roll everything that we owe over the years, our interest payments are about 2.35%,” Mehrabian said.
For the rest of the year, the company will likely continue buying back stock, he said.
“We expect to continue to do that, but we’re also looking at acquisitions at the same time,” he said. “So, we’re balancing the two as we go forward right now… we think that we’re in a really good situation.”
The company has renewed its line of credit for another five years but hasn’t touched it yet, and has about $1.2 billion at its disposal, he continued.
“So, with no debt payments, big ones coming due, our interest rates being 2.35% over the many years, we feel good that we can do whatever we want,” Mehrabian said. “Right now, (we’re) focused on buying back stock and looking at acquisitions as well.”
