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Item 1. Financial Statements

2024-07-29 compared with 2024-04-29 · 383 added, 205 removed, 653 unchanged (47% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

FOR THE FIRST QUARTER ENDED MARCH 31, 2024 AND APRIL 2, 2023

FOR THE SECOND QUARTER AND SIX MONTHS ENDED JUNE 30, 2024 AND JULY 2, 2023

(Unaudited - Amounts in millions, except per-share amounts)

First Quarter

Second Quarter Six Months

2024 2023 2024 2023

Net sales $ 1,374.1 $ 1,424.7 $ 2,724.2 $ 2,808.0

5 unchanged sentences

Operating income (loss)

247.0 256.1 481.3 498.6

Interest and debt income (expense), net ( 15.8 ) ( 22.3 ) ( 28.5 ) ( 43.3 )

Gain (loss) on debt extinguishment — 1.6 — 1.6

Non-service retirement benefit income (expense), net 2.7 2.9 5.4 6.2

1 unchanged sentence

Income (loss) before income taxes

231.7 234.9 457.2 458.6

Provision (benefit) for income taxes 51.4 49.4 97.8 94.3

9 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

FOR THE FIRST QUARTER ENDED MARCH 31, 2024 AND APRIL 2, 2023

FOR THE SECOND QUARTER AND SIX MONTHS ENDED JUNE 30, 2024 AND JULY 2, 2023

(Unaudited - Amounts in millions)

First Quarter

Second Quarter Six Months

2024 2023 2024 2023

Net income (loss) including noncontrolling interest $ 180.3 $ 185.5 $ 359.4 $ 364.3

11 unchanged sentences

(Unaudited - Amounts in millions, except share amounts)

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Current Assets

5 unchanged sentences

Total current assets 2,744.7 2,981.4

Property, plant and equipment, net of accumulated depreciation and amortization of $ 961.3 at March 31, 2024 and $ 947.1 at December 31, 2023

Property, plant and equipment, net of accumulated depreciation and amortization of $ 984.8 at June 30, 2024 and $ 947.1 at December 31, 2023

Goodwill 8,040.2 8,002.8

19 unchanged sentences

Common stock, $ 0.01 par value;

authorized 125,000,000 shares;

issued shares:

47,420,690 at March 31, 2024 and 47,331,845 at December 31, 2023;

47,432,939 at June 30, 2024 and 47,331,845 at December 31, 2023;

outstanding shares:

47,420,690 at March 31, 2024 and 47,331,845 at December 31, 2023

46,943,484 at June 30, 2024 and 47,331,845 at December 31, 2023

Additional paid-in capital 4,435.9 4,407.3

Retained earnings 5,806.2 5,447.5

Treasury stock - none

Treasury stock, 489,455 shares at June 30, 2024 and — at December 31, 2023

Accumulated other comprehensive income (loss) ( 731.0 ) ( 634.1 )

12 unchanged sentences

Balance, March 31, 2024 0.5 4,426.5 — 5,626.0 ( 725.0 ) 9,328.0

Net income (loss) — — — 180.2 — 180.2

Other comprehensive income (loss), net of tax — — — — ( 6.0 ) ( 6.0 )

Treasury stock issued — ( 1.9 ) 1.9 — — —

Treasury stock repurchased — — ( 193.8 ) — — ( 193.8 )

Stock-based compensation — 9.3 — — — 9.3

Exercise of stock options and other — 2.0 — — — 2.0

Balance, June 30, 2024 $ 0.5 $ 4,435.9 $ ( 191.9 ) $ 5,806.2 $ ( 731.0 ) $ 9,319.7

Common Stock Additional Paid-in Capital Treasury Stock Retained Earnings Accumulated Other Comprehensive Income (Loss) Total

6 unchanged sentences

Balance, April 2, 2023 0.5 4,360.9 ( 9.4 ) 4,740.5 ( 726.8 ) 8,365.7

Net income (loss) — — — 185.3 — 185.3

Other comprehensive income (loss), net of tax — — — — 14.8 14.8

Treasury stock issued — ( 2.9 ) 2.9 — — —

Stock based compensation — 8.4 — — — 8.4

Exercise of stock options — 4.8 — — — 4.8

Balance, July 2, 2023 $ 0.5 $ 4,371.2 $ ( 6.5 ) $ 4,925.8 $ ( 712.0 ) $ 8,579.0

The accompanying notes are an integral part of these condensed consolidated financial statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND APRIL 2, 2023

FOR THE SIX MONTHS ENDED JUNE 30, 2024 AND JULY 2, 2023

(Unaudited - Amounts in millions)

4 unchanged sentences

Stock-based compensation 21.3 16.3

Debt extinguishment (income) expense — ( 1.6 )

Changes in operating assets and liabilities excluding the effect of business acquired:

9 unchanged sentences

Purchases of property, plant and equipment ( 33.6 ) ( 51.7 )

Purchase of businesses, net of cash acquired — ( 52.5 )

Purchases of businesses, net of cash acquired ( 123.6 ) ( 53.5 )

Other investing, net 0.1 0.7

Net cash provided by (used in) investing activities ( 157.1 ) ( 104.5 )

Financing Activities

Proceeds from (payments on) fixed rate senior notes ( 450.0 ) ( 308.4 )

Net borrowings from (repayments made to) credit facility — ( 125.0 )

1 unchanged sentence

Proceeds from exercise of stock options 11.5 15.0

Purchases of treasury stock ( 193.8 ) —

Liquidation (maturity) of cross currency swap — ( 13.5 )

1 unchanged sentence

Net cash provided by (used in) financing activities ( 637.9 ) ( 567.8 )

Effect of exchange rate changes on cash ( 17.1 ) 4.4

Effects of exchange rate changes on cash ( 19.8 ) 4.9

Change in cash and cash equivalents ( 205.1 ) ( 273.9 )

4 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

March 31, 2024

June 30, 2024

Basis of Presentation

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The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the related notes in Teledyne’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (“2023 Form 10-K”).

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) necessary to present fairly, in all material respects, Teledyne’s consolidated financial position as of March 31, 2024 and the consolidated results of operations, consolidated comprehensive income (loss) and consolidated cash flows for the first quarter ended March 31, 2024.

The results of operations and cash flows for the periods ended March 31, 2024 and cash flows for the three months ended March 31, 2024 are not necessarily indicative of the results of operations or cash flows to be expected for any subsequent quarter or the full fiscal year.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) necessary to present fairly, in all material respects, Teledyne’s consolidated financial position as of June 30, 2024 and the consolidated results of operations, consolidated comprehensive income (loss) and consolidated cash flows for the second quarter and six months ended June 30, 2024.

The results of operations and cash flows for the periods ended June 30, 2024 and cash flows for the six months ended June 30, 2024 are not necessarily indicative of the results of operations or cash flows to be expected for any subsequent quarter or the full fiscal year.

Recent Accounting Standards

14 unchanged sentences

2024 Acquisitions

Refer to Note 15 for discussion of announced acquisitions or acquisitions completed after the end of the first quarter of 2024.

During the second quarter of 2024, the Company acquired Adimec Holding B.V.

and its subsidiaries (“Adimec”) for $ 88.1 million in cash, net of cash acquired, and subject to certain adjustments.

Adimec, founded in 1992 and headquartered in Eindhoven, Netherlands, develops customized high-performance industrial and scientific cameras.

Adimec is part of the Digital Imaging segment.

Goodwill resulting from the Adimec acquisition will not be deductible for tax purposes.

During the second quarter of 2024, the Company acquired Valeport Holdings 2019 Limited and its affiliates ("Valeport") for $ 35.5 million in cash, net of cash acquired, subject to certain adjustments.

Approximately 10 % of the purchase price is payable in fiscal year 2025.

Valeport, founded in 1969 and headquartered in Totnes, United Kingdom, designs and manufactures underwater sensors for environmental, energy, construction and defense applications.

Valeport is part of the Marine Instrumentation product line within the Instrumentation segment.

Goodwill resulting from the Valeport acquisition will not be deductible for tax purposes.

2023 Acquisitions

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The following tables show the purchase price (net of cash acquired), goodwill acquired, and acquired intangible assets for these acquisitions (in millions):

Acquisitions Acquisition Date Cash Paid (a) Goodwill Acquired Acquired Intangible Assets

Acquisitions Acquisition Date Consideration Transferred (a) Goodwill Acquired Acquired Intangible Assets

Adimec June 4, 2024 $ 88.1 $ 63.8 $ 17.9

Valeport April 10, 2024 35.5 23.3 7.8

$ 123.6 $ 87.1 $ 25.7

(a) Net of cash acquired;

approximately 10 % of the Valeport purchase price is payable in 2025 and included in the amount above

Acquisitions Acquisition Date Consideration Transferred (a) Goodwill Acquired Acquired Intangible Assets

Xena Networks October 13, 2023 $ 24.2 $ 21.1 $ 4.8

4 unchanged sentences

The differences between the fair value of the consideration paid and the estimated fair value of the assets and liabilities acquired was recorded as goodwill.

The fair value of the acquired identifiable assets and liabilities for the Xena Networks acquisition is provisional pending finalization of the Company’s acquisition accounting, including the measurement of tax basis in certain jurisdictions and the resulting deferred taxes that might arise from book and tax basis differences, if any.

The fair value of the acquired identifiable assets and liabilities for the Adimec, Valeport and Xena Networks acquisition is provisional pending finalization of the Company’s acquisition accounting, including the measurement of tax basis in certain jurisdictions and the resulting deferred taxes that might arise from book and tax basis differences, if any.

Pro forma results of operations, the revenue and net income subsequent to the acquisition date, and a more detailed breakout of the major classes of assets and liabilities acquired for these acquisitions have not been presented because the effects of these acquisitions, individually and in the aggregate, were not material to the Company's financial results.

The significant factors that resulted in recognition of goodwill for the 2023 acquisitions included the acquired businesses’ market positions, growth opportunities in the markets in which they operate, their experienced work force and established operating infrastructures.

The significant factors that resulted in recognition of goodwill for the 2023 and 2024 acquisitions included the acquired businesses’ market positions, growth opportunities in the markets in which they operate, their experienced work force and established operating infrastructures.

The results of these acquisitions have been included in Teledyne’s results since the dates of their respective acquisition.

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The following table presents net sales and operating income by segment (dollars in millions):

First Quarter %

2024 2023 Change

Second Quarter % Six Months %

2024 2023 Change 2024 2023 Change

Net sales (a):

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Operating income $ 247.0 $ 256.1 ( 3.6 ) % $ 481.3 $ 498.6 ( 3.5 ) %

(a) Net sales exclude inter-segment sales of $ 4.8 million and $ 6.2 million for the first quarter of 2024 and 2023, respectively.

(a) Net sales exclude inter-segment sales of $ 8.5 million and $ 13.3 million for the second quarter and first six months of 2024, respectively, and $ 8.1 million and $ 14.3 million for the second quarter and first six months of 2023, respectively.

Identifiable assets are those assets used in the operations of the segments.

1 unchanged sentence

Identifiable assets:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Digital Imaging $ 11,236.1 $ 11,382.2

9 unchanged sentences

The following table provides a summary of the net sales by product line for the Instrumentation segment (in millions):

First Quarter

Second Quarter Six Months

Instrumentation 2024 2023 2024 2023

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The Company disaggregates its revenue from contracts with customers by customer type and geographic region for each segment, as management believes it best depicts how the nature, amount, timing and uncertainty of its revenue and cash flows are affected by economic factors.

First Quarter Ended

March 31, 2024

First Quarter Ended

March 31, 2024

Second Quarter Ended

June 30, 2024

Second Quarter Ended

June 30, 2024

Customer Type Geographic Region (c)

9 unchanged sentences

First Quarter Ended

April 2, 2023

First Quarter Ended

April 2, 2023

Six Months Ended

June 30, 2024

Six Months Ended

June 30, 2024

Customer Type Geographic Region (c)

6 unchanged sentences

Total $ 610.8 $ 2,113.4 $ 2,724.2 $ 1,412.4 $ 649.1 $ 431.8 $ 230.9 $ 2,724.2

Government sale include sales as a prime contractor or subcontractor.

Government sales include sales as a prime contractor or subcontractor.

(b) Primarily commercial sales

Second Quarter Ended

Customer Type Geographic Region (c)

(in millions) U.S.

(a) Other (b) Total United States Europe Asia All other Total

Digital Imaging $ 131.3 $ 662.0 $ 793.3 $ 356.4 $ 207.3 $ 152.4 $ 77.2 $ 793.3

Instrumentation 21.3 307.1 328.4 139.4 95.2 64.6 29.2 328.4

Aerospace and Defense Electronics 61.0 125.0 186.0 126.0 36.2 15.5 8.3 186.0

Engineered Systems 103.2 13.8 117.0 114.4 — 0.4 2.2 117.0

Total $ 316.8 $ 1,107.9 $ 1,424.7 $ 736.2 $ 338.7 $ 232.9 $ 116.9 $ 1,424.7

Government sales include sales as a prime contractor or subcontractor.

(b) Primarily commercial sales

Six Months Ended

Customer Type Geographic Region (c)

(in millions) U.S.

(a) Other (b) Total United States Europe Asia All other Total

Digital Imaging $ 261.6 $ 1,304.2 $ 1,565.8 $ 690.8 $ 404.6 $ 310.8 $ 159.6 $ 1,565.8

Instrumentation 44.3 617.6 $ 661.9 277.4 192.4 132.1 60.0 661.9

Aerospace and Defense Electronics 125.7 233.5 $ 359.2 246.1 65.7 32.5 14.9 359.2

Engineered Systems 196.5 24.6 $ 221.1 217.7 — 0.6 2.8 221.1

Total $ 628.1 $ 2,179.9 $ 2,808.0 $ 1,432.0 $ 662.7 $ 476.0 $ 237.3 $ 2,808.0

Government sales include sales as a prime contractor or subcontractor.

(b) Primarily commercial sales

With the exception of the Engineered Systems segment, net sales in each segment are primarily derived from fixed price contracts.

Net sales in the Engineered Systems segment are typically between 45 % and 55 % fixed price contracts in a given reporting period, with the balance of net sales derived from cost-reimbursable type contracts.

For the three months ended March 31, 2024, approximately 47 % of net sales in the Engineered Systems segment were derived from fixed price contracts.

For the six months ended June 30, 2024, approximately 49 % of net sales in the Engineered Systems segment were derived from fixed price contracts.

Contract Liabilities

Contract Liabilities by Balance Sheet Location (in millions) March 31, 2024

Contract Liabilities by Balance Sheet Location (in millions) June 30, 2024

December 31, 2023

2 unchanged sentences

Total contract liabilities $ 340.7 $ 266.6

The Company recognized revenue of $ 66.3 million during the three months ended March 31, 2024 from contract liabilities that existed at the beginning of year.

The Company recognized revenue of $ 101.3 million during the six months ended June 30, 2024 from contract liabilities that existed at the beginning of year.

Remaining Performance Obligations

Remaining performance obligations represent the transaction price of firm orders for which work has not been performed as of the period end date and exclude unexercised contract options and potential orders under ordering-type contracts (e.g., indefinite-delivery, indefinite-quantity).

As of March 31, 2024, the aggregate amount of the transaction price allocated to remaining performance obligations was $ 3,290.2 million.

As of June 30, 2024, the aggregate amount of the transaction price allocated to remaining performance obligations was $ 3,419.3 million.

The Company expects approximately 77 % of remaining performance obligations to be recognized into revenue within the next twelve months , with the remaining 23 % recognized thereafter.

7 unchanged sentences

Contract cost and revenue estimates for significant contracts are generally reviewed and reassessed quarterly.

The net aggregate effects of these changes in estimates on contracts accounted for under the cost-to-cost method in the first three months of 2024 was $ 0.3 million of unfavorable operating income compared with $ 2.9 million of favorable operating income in the first three months of 2023.

The net aggregate effects of these changes in estimates on contracts accounted for under the cost-to-cost method in the first six months of 2024 was $ 2.1 million of favorable operating income compared with $ 0.5 million of unfavorable operating income in the first six months of 2023.

None of the effects of changes in estimates on any individual contract were material to the consolidated statements of income (loss) for any period presented.

Goodwill and Intangible Assets

Goodwill and Acquired Intangible Assets

The carrying value of goodwill by segment was as follows (in millions):

2 unchanged sentences

$ 6,877.0 $ 944.8 $ 163.4 $ 17.6 $ 8,002.8

Current year acquisitions 63.8 23.3 — — 87.1

Foreign currency changes and other ( 42.0 ) ( 7.5 ) ( 0.2 ) — ( 49.7 )

Balance at March 31, 2024

Balance at June 30, 2024

$ 6,898.8 $ 960.6 $ 163.2 $ 17.6 $ 8,040.2

1 unchanged sentence

(in millions):

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Gross carrying amount Accumulated amortization Net carrying amount Gross carrying amount Accumulated amortization Net carrying amount

10 unchanged sentences

An evaluation of the carrying value of goodwill and indefinite-lived intangibles is required to be performed on an annual basis and on an interim basis if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value.

There have been no events or changes in circumstances which indicate an interim impairment review is required in 2024.

Based on the results of the Company’s annual assessment in the fourth quarter of 2023, all reporting units with the exception of the FLIR reporting unit had estimated fair values that exceeded their respective carrying value by more than 100 %.

At the assessment date in the fourth quarter of 2023, the estimated fair value of the FLIR reporting unit exceeded its carrying value by approximately $ 460 million or 6 %, and the FLIR reporting unit had $ 5,832.4 million of goodwill at the prior year assessment date.

As of June 30, 2024, the FLIR reporting unit had $ 5,850.8 million of goodwill, with the change in value from the prior year assessment date related to the impact of foreign currency translation.

Although the assumptions used in the Company’s prior year discounted cash flow model and market approach are based on assumptions that are considered reasonable by management and consistent with the plans and estimates management uses to operate the underlying businesses, there is significant judgment in determining the expected results of the FLIR reporting unit.

Changes in forecast estimates or the application of alternative assumptions could produce significantly different results.

The discount rate, which is consistent with a weighted average cost of capital that is likely to be expected by a market participant, is based upon industry required rates of return, including consideration of both debt and equity components of the capital structure.

Although no impairment existed for the FLIR reporting unit as of the prior year assessment date, a non-cash impairment of goodwill could result from a number of circumstances, including different assumptions used in determining the fair value of the reporting unit, changes to customer spending priorities, or a sharp increase in interest rates without a corresponding increase in future net sales.

For all reporting units, including the FLIR reporting unit, there have been no events or changes in circumstances which indicate an interim impairment review is required in 2024.

The Company will perform its annual analysis during the fourth quarter of 2024.

Based on the results of the Company’s annual assessment in the fourth quarter of 2023, the estimated fair value of all material indefinite-lived trademarks, with the exception of the FLIR indefinite-lived trademark, significantly exceeded their respective carrying value.

Trademarks of recently acquired businesses generally represent a higher inherent risk of impairment, which

typically decreases as the businesses are integrated into the Company.

At the prior year annual assessment date, the FLIR indefinite-lived trademark had a carrying value of $ 685.3 million and a fair value of $ 694.9 million.

The most significant assumptions utilized in the determination of the fair value of the FLIR trademark are the net sales growth rates (including residual growth rates), discount rate and royalty rate.

Although the FLIR sales forecasts are based on assumptions that are considered reasonable by management and consistent with the plans and estimates management uses to operate the underlying businesses, there is significant judgment in determining the expected results of the FLIR business.

Changes in sales forecast estimates or the application of alternative assumptions could produce significantly different results.

The royalty rate was driven by historical and estimated future profitability of the underlying FLIR business, and the royalty rate assumption was consistent with assumptions used by the Company as part of the purchase price allocation of FLIR in 2021.

The royalty rate may be impacted by significant adverse changes in long-term operating margins.

Although no impairment exists for the FLIR trademark, a non-cash impairment of the trademark could result from a number of circumstances, including different assumptions used in determining the fair value of the trademark, changes to customer spending priorities, or a sharp increase in interest rates without a corresponding increase in future net sales.

For all indefinite-lived trademarks, including the FLIR trademark, there have been no events or changes in circumstances which indicate an interim impairment review is required in 2024.

The Company will perform its annual analysis during the fourth quarter of 2024.

Supplemental Balance Sheet Information

Cash Equivalents

The Company had $ 527.1 million and $ 265.1 million of cash equivalents at March 31, 2024 and December 31, 2023, respectively.

The Company had $ 48.8 million and $ 265.1 million of cash equivalents at June 30, 2024 and December 31, 2023, respectively.

The Company has categorized its cash equivalents as a Level 1 financial asset, measured at fair value based on quoted prices in active markets of identical assets.

Accounts Receivable, net

Accounts receivable is presented net of an allowance for doubtful accounts of $ 11.4 million at March 31, 2024 and $ 11.5 million at December 31, 2023.

Accounts receivable is presented net of an allowance for doubtful accounts of $ 12.4 million at June 30, 2024 and $ 11.5 million at December 31, 2023.

Inventories, net

2 unchanged sentences

Inventory balances are summarized as follows (in millions):

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Raw materials and supplies $ 581.3 $ 560.6

10 unchanged sentences

Deductions ( 14.9 ) ( 7.5 )

Acquisition 0.4 —

Balance at end of period $ 48.3 $ 51.0

1 unchanged sentence

Long-Term Debt (in millions):

March 31, 2024 December 31, 2023

$ 1.15 billion credit facility due March 2026

0.95 % Fixed Rate Senior Notes due April 2024

Term loan due October 2024, variable rate of 6.68 % at March 31, 2024 and 6.71 % at December 31, 2023, swapped to a Euro fixed rate of 0.61 %

June 30, 2024 December 31, 2023

$ 1.20 billion credit facility due June 2029

Term loan due October 2024, variable rate of 6.69 % at June 30, 2024 and 6.71 % at December 31, 2023, swapped to a Euro fixed rate of 0.61 %

1.60 % Fixed Rate Senior Notes due April 2026

3 unchanged sentences

1,030.0 1,030.0

0.95 % Fixed Rate Senior Notes due and repaid April 2024

Other debt 1.4 1.0

3 unchanged sentences

Total long-term debt, net of current portion $ 2,646.9 $ 2,644.8

At March 31, 2024, $ 1,128.2 million was available under the $ 1.15 billion credit facility, after a reduction of $ 21.8 million in outstanding letters of credit.

The Company’s bank credit agreements requires it to comply with various financial and operating covenants and at March 31, 2024, the Company was in compliance with these covenants.

Subsequent to the end of the first quarter of 2024, the Company made a $ 450 million debt maturity payment on the Senior Notes due April 2024.

At June 30, 2024, $ 1,177.7 million was available under the $ 1.20 billion credit facility, after a reduction of $ 22.3 million in outstanding letters of credit.

The Company’s bank credit agreements requires it to comply with various financial and operating covenants and at June 30, 2024, the Company was in compliance with these covenants.

During the second quarter of 2024, the Company made a $ 450 million debt maturity payment on the Senior Notes due April 2024.

Teledyne estimates the fair value of its long-term debt based on debt of similar type, rating and maturity and at comparable interest rates.

The Company’s long-term debt is considered a level 2 input in the fair value hierarchy and is valued based on observable market data.

As of March 31, 2024 and December 31, 2023, the aggregate fair values of our borrowings were $ 2,945.5 million and $ 2,965.3 million, respectively, and the carrying values were $ 3,266.3 million and $ 3,266.0 million, respectively.

The Company estimates the fair value of long-term debt by using Level 2 inputs in the fair value hierarchy which is based on observable market data.

As of June 30, 2024 and December 31, 2023, the aggregate fair values of our borrowings were $ 2,493.2 million and $ 2,965.3 million, respectively, and the carrying values were $ 2,816.4 million and $ 3,266.0 million, respectively.

The income tax provision is calculated using an estimated annual effective tax rate, based upon estimates of annual income, permanent items, statutory tax rates and planned tax strategies in the various jurisdictions in which we operate except that certain loss jurisdictions and discrete items, such as the resolution of uncertain tax positions and stock-based accounting income tax benefits, are treated separately.

First Quarter

Second Quarter Six Months

(Dollars in millions) 2024 2023 2024 2023

Provision (benefit) for income taxes $ 46.4 $ 44.9

Discrete event expense (benefit):

Stock-based accounting $ ( 5.3 ) $ ( 5.9 )

Uncertain tax position reserves (primarily acquisition related) 0.3 0.3

Other discrete event expense (benefit) 0.6 ( 0.9 )

Discrete event expense (benefit):

$ ( 4.4 ) $ ( 6.5 )

Provision (benefit) for income taxes without discrete event expense (benefit) $ 50.8 $ 51.4

Provision (benefit) for income taxes (a) $ 51.4 $ 49.4 $ 97.8 $ 94.3

Income (loss) before income taxes $ 231.7 $ 234.9 $ 457.2 $ 458.6

Effective tax rate 22.2 % 21.0 % 21.4 % 20.6 %

Effective tax rate without discrete events 22.5 % 23.0 %

(a) The second quarter of 2024 includes net discrete income tax benefits of $ 0.7 million and the first six months of 2024 includes net discrete income tax benefits of $ 5.1 million, respectively.

The second quarter of 2023 includes net discrete income tax benefits of $ 1.4 million and the first six months of 2023 includes net discrete income tax benefits of $ 8.0 million, respectively.

Numerous foreign jurisdictions have enacted or are in the process of enacting legislation to adopt a minimum effective tax rate described in the Global Anti-Base Erosion, or Pillar Two, model rules issued by the Organization for Economic Co-operation and Development (“OECD”).

A minimum effective tax rate of 15% would apply to multinational companies with consolidated revenue above €750 million.

Under the Pillar Two rules, a company would be required to determine a combined effective tax rate for all entities located in a jurisdiction.

Under the Pillar Two rules, a company is required to determine a combined effective tax rate for all entities located in a jurisdiction.

If the jurisdictional effective tax rate determined under the Pillar Two is less than 15%, a top-up tax will be due to bring the jurisdictional effective tax rate up to 15%.

The Company is continuing to monitor the pending implementation of

Pillar Two by individual countries and the potential effects of Pillar Two on our business.

The Company is continuing to monitor the implementation of Pillar Two by individual countries and the potential effects of Pillar Two on our business.

The Company does not expect the provisions effective in 2024 will have a materially adverse impact on its results of operations, financial position or cash flows.

4 unchanged sentences

Pension Plans

First Quarter

Second Quarter Six Months

2024 2023 2024 2023

Service cost — benefits earned during the period (in millions) $ 1.5 $ 1.5 $ 3.0 $ 3.0

9 unchanged sentences

The Company issues shares of common stock upon the exercise of stock options.

Stock-based compensation expense was $ 12.0 million for the first quarter of 2024 and $ 7.9 million first quarter of 2023.

Stock option activity for the first quarter of 2024 is as follows:

First Quarter

Shares Weighted Average Exercise Price

In 2024, the Company began using the Black-Scholes option pricing model to determine the fair value of stock options.

The adoption of the Black-Scholes option pricing model was driven by a review of option exercise history, which more closely aligned with the methodology of the Black-Scholes option pricing model, and the adoption of the Black-Scholes option pricing model did not materially change the grant-date fair value calculation.

Stock-based compensation expense was $ 9.3 million and $ 21.3 million for the second quarter and first six months of 2024, respectively, and $ 8.4 million and $ 16.3 million for the second quarter and first six months of 2023, respectively.

Stock option activity for the second quarter and first six months of 2024 is as follows:

Second Quarter Six Months

Shares Weighted Average Exercise Price Shares Weighted Average

Exercise Price

Beginning balance 1,312,665 $ 267.47 1,337,972 $ 223.43

4 unchanged sentences

Exercisable at end of period 1,086,068 $ 242.05 1,086,068 $ 242.05

Restricted stock activity for the first three months of 2024 is as follows:

Shares Weighted average fair value per share

Balance at December 31, 2023

123,089 $ 364.86

Restricted stock activity for the second quarter and first six months of 2024 is as follows:

Second Quarter Six Months

Shares Weighted average fair value per share Shares Weighted average fair value per share

Beginning balance 188,237 $ 394.81 123,089 $ 364.86

Granted 4,783 $ 364.21 94,050 $ 428.99

1 unchanged sentence

Forfeited/canceled ( 1,882 ) $ 391.94 ( 5,138 ) $ 381.97

Balance at March 31, 2024

188,237 $ 394.81

Ending balance 188,968 $ 383.89 188,968 $ 383.89

Earnings Per Share

The weighted average number of common shares used in the calculation of basic and diluted earnings per share consisted of the following (in millions):

First Quarter

Second Quarter Six Months

2024 2023 2024 2023

Weighted average basic common shares outstanding 47.2 47.0 47.3 47.0

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Weighted average diluted common shares outstanding 47.8 47.9 47.9 47.9

For the first quarter of 2024 and 2023, the Company excluded approximately 0.2 million of stock options in the computation of diluted earnings per share because the effect of their inclusion would have been anti-dilutive.

For the second quarter and first six months of 2024 and 2023, the Company excluded approximately 0.2 million of stock options in the computation of diluted earnings per share because the effect of their inclusion would have been anti-dilutive.

Stock Repurchases

In April 2024, our Board of Directors approved a stock repurchase program authorizing the Company to repurchase up to $ 1.25 billion of Teledyne’s common stock.

This authorization superseded prior open stock repurchase programs authorized by the Board of Directors.

The newly authorized stock repurchase program does not have a stated expiration date.

Shares may be repurchased from time to time in open market transactions at prevailing market prices, in privately negotiated transactions or

via an accelerated stock repurchase program.

Shares could be repurchased in a plan pursuant to Rule 10b5-1 of the Securities Exchange Act of 1934.

The repurchase program is expected to remain open continuously, and the number of shares purchased will depend on a variety of factors, such as share price, levels of cash available, acquisitions and alternative investment opportunities available immediately or longer-term, and other regulatory, market or economic conditions.

The Company currently intends to fund future share repurchases with cash on hand and available borrowings under the Company's credit facility.

During the second quarter of 2024, the Company repurchased approximately 0.5 million shares for $ 193.8 million with a weighted-average price of $ 391.92 per share.

Subsequent to the end of the second quarter of 2024, the Company repurchased approximately 0.2 million shares for $ 84.5 million with a weighted-average price of $ 394.43 per share.

Accumulated Other Comprehensive Income (Loss)

The changes in accumulated other comprehensive income (loss) ("AOCI") by component, net of tax, for the first quarter ended March 31, 2024 and April 2, 2023 are as follows (in millions):

The changes in accumulated other comprehensive income (loss) ("AOCI") by component, net of tax, for the second quarter and six months ended June 30, 2024 and July 2, 2023 are as follows (in millions):

Foreign Currency Translation Cash Flow Hedges and Other Pension and Postretirement Benefits Total

Balance at March 31, 2024

$ ( 481.5 ) $ 4.0 $ ( 247.5 ) $ ( 725.0 )

Other comprehensive income (loss) before reclassifications ( 5.8 ) ( 2.0 ) — ( 7.8 )

Amounts reclassified from AOCI — ( 0.3 ) 2.1 1.8

Net other comprehensive income (loss) ( 5.8 ) ( 2.3 ) 2.1 ( 6.0 )

Balance at June 30, 2024

$ ( 487.3 ) $ 1.7 $ ( 245.4 ) $ ( 731.0 )

Foreign Currency Translation Cash Flow Hedges and Other Pension and Postretirement Benefits Total

Balance at April 2, 2023

$ ( 476.6 ) $ 3.8 $ ( 254.0 ) $ ( 726.8 )

Other comprehensive income (loss) before reclassifications 12.3 3.0 — 15.3

Amounts reclassified from AOCI — ( 1.4 ) 0.9 ( 0.5 )

Net other comprehensive income (loss) 12.3 1.6 0.9 14.8

Balance at July 2, 2023

$ ( 464.3 ) $ 5.4 $ ( 253.1 ) $ ( 712.0 )

Foreign Currency Translation Cash Flow Hedges and Other Pension and Postretirement Benefits Total

Balance at December 31, 2023

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Net other comprehensive income (loss) ( 94.6 ) ( 6.5 ) 4.2 ( 96.9 )

Balance at March 31, 2024

Balance at June 30, 2024

$ ( 487.3 ) $ 1.7 $ ( 245.4 ) $ ( 731.0 )

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Net other comprehensive income (loss) 8.0 4.1 2.4 14.5

Balance at April 2, 2023

Balance at July 2, 2023

$ ( 464.3 ) $ 5.4 $ ( 253.1 ) $ ( 712.0 )

The reclassifications out of AOCI to net income for the first quarter ended March 31, 2024 and April 2, 2023 are as follows (in millions):

The reclassifications out of AOCI to net income for the second quarter ended June 30, 2024 and July 2, 2023 are as follows (in millions):

Amount Reclassified from AOCI for the Quarter Ended Amount Reclassified from AOCI for the Quarter Ended Statement of Income (Loss) Presentation

March 31, 2024 April 2, 2023

June 30, 2024 July 2, 2023

(Gain) loss on cash flow hedges:

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Total $ 2.1 $ 0.9

Amount Reclassified from AOCI for the Six Months Ended

Statement of Income (Loss) Presentation

June 30, 2024 July 2, 2023

(Gain) loss on cash flow hedges:

Gain recognized in income on derivatives $ ( 9.7 ) $ ( 11.6 ) See Note 13

Income tax impact 2.5 2.9 Provision for income taxes

Total $ ( 7.2 ) $ ( 8.7 )

Amortization of defined benefit pension and postretirement plan items:

Amortization of prior service cost $ ( 0.2 ) $ ( 0.9 ) Costs and expenses

Amortization of net actuarial loss 5.8 4.3 Costs and expenses

Total before tax 5.6 3.4

Income tax impact ( 1.4 ) ( 1.0 ) Provision for income taxes

Total $ 4.2 $ 2.4

Derivative Instruments and Hedging Activities

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These contracts are designated and qualify as cash flow hedges.

As of March 31, 2024, the Company had foreign currency forward contracts to buy Canadian dollars and to sell U.S.

As of June 30, 2024, the Company had foreign currency forward contracts to buy Canadian dollars and to sell U.S.

dollars totaling $ 98.5 million.

These foreign currency forward contracts have maturities ranging from June 2024 to February 2026.

As of March 31, 2024, the Company had foreign currency forward contracts to buy British pounds and to sell U.S.

These foreign currency forward contracts have maturities ranging from September 2024 to February 2026.

As of June 30, 2024, the Company had foreign currency forward contracts to buy British pounds and to sell U.S.

dollars totaling $ 8.3 million.

These foreign currency forward contracts have maturities ranging from June 2024 to February 2025.

These foreign currency forward contracts have maturities ranging from September 2024 to February 2025.

The Company utilizes foreign currency forward contracts to mitigate foreign exchange rate risk associated with foreign currency denominated monetary assets and liabilities, including intercompany receivables and payables.

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This cross currency swap is designated as cash flow hedge.

As of March 31, 2024, the Company has a cross currency swap outstanding with a notional amount of € 156.0 million and $ 150.0 million that matures in October 2024.

As of June 30, 2024, the Company has a cross currency swap outstanding with a notional amount of € 156.0 million and $ 150.0 million that matures in October 2024.

All derivative instruments are recorded on the condensed consolidated balance sheets at fair value.

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The amount recorded within AOCI is reclassified into earnings in the same period during which the underlying hedged transaction affects earnings.

The effect of derivative instruments designated as cash flow hedges in the condensed consolidated financial statements for the first quarter ended March 31, 2024 and April 2, 2023 was as follows (in millions):

First Quarter

The effect of derivative instruments designated as cash flow hedges in the condensed consolidated financial statements for the second quarter and six months ended June 30, 2024 and July 2, 2023 was as follows (in millions):

Second Quarter Six Months

2024 2023 2024 2023

Net gain (loss) recognized in AOCI - Foreign Exchange Contracts (a) $ 0.2 $ 3.1 $ 0.9 $ 16.8

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For a derivative instrument that has not been designated as an accounting hedge, the change in the fair value is recognized immediately in earnings.

As of March 31, 2024, the Company had foreign currency forward contracts not designated as accounting hedges primarily in the following types and pairs (in millions):

As of June 30, 2024, the Company had foreign currency forward contracts not designated as accounting hedges primarily in the following types and pairs (in millions):

Contracts to Buy Contracts to Sell

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Dollars US$ 202.3

Canadian Dollars $ 12.6 Euros € 8.6

Danish Krone DKR 154.8 U.S.

Danish Krone Kr.

Dollars US$ 24.4

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Dollars US$ 20.8

Swedish Krona SEK 284.3 Euros € 26.1

Swedish Krona SEK 310.4 U.S.

Swedish Krona kr 174.9 Euros € 15.3

Swedish Krona kr 467.6 U.S.

Dollars US$ 44.3

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The gains and losses on these derivatives instruments which are not designated as accounting hedges are intended to, at a minimum, partially offset the transaction gains and losses recognized in earnings.

The effect of derivative instruments not designated as accounting hedges recognized in other income and expense for the first quarter ended March 31, 2024 was expense of $ 9.3 million.

The effect of derivative instruments not designated as accounting hedges in other income and expense for the first quarter ended April 2, 2023 was income of $ 7.8 million.

The effect of derivative instruments not designated as accounting hedges recognized in other income and expense for the second quarter and six months ended June 30, 2024 was expense of $ 2.8 million and $ 12.1 million, respectively.

The effect of derivative instruments not designated as accounting hedges in other income and expense for the second quarter and six months ended July 2, 2023 was income of $ 2.0 million and $ 9.7 million, respectively.

The income or expense was largely offset by losses or gains in the value of the underlying hedged item excluding the impact of forward points.

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All fair values for these derivative instruments were measured using Level 2 inputs in the fair value hierarchy (in millions):

Asset/(Liability) Derivative Instruments Balance sheet location March 31, 2024 December 31, 2023

Asset/(Liability) Derivative Instruments Balance sheet location June 30, 2024 December 31, 2023

Derivatives designated as hedging instruments:

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Cash flow forward contracts Other non-current assets 0.2 2.4

Interest rate contracts Other current assets (accrued interest) 0.1 0.1

Cash flow cross currency swap Other current assets ( 17.3 ) ( 21.3 )

Cash flow forward contracts Other current liabilities ( 0.3 ) —

Currency / interest rate contracts Other current assets (accrued interest) 0.1 0.1

Currency / interest rate contracts Other current liabilities ( 16.5 ) ( 21.3 )

Total derivatives designated as hedging instruments ( 16.1 ) ( 15.1 )

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Department of Commerce, including to the Bureau of Industry and Security (“BIS”) with respect to Teledyne FLIR shipments of products from non-U.S.

jurisdictions which were not licensed due to incorrect de minimis calculation methodology under the Export Administration Regulations.

jurisdictions which were not licensed due to an incorrect de minimis calculation methodology under the Export Administration Regulations.

The Company has also made voluntary disclosures to export authorities in jurisdictions outside the U.S.

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At this time, based on available information, we are unable to reasonably estimate the time it may take to resolve these matters or the amount or range of potential loss, penalty or other government action, if any, that may be incurred in connection with these matters.

However, an unfavorable outcome could result in substantial fines and penalties or loss or suspension of export privileges or of particular authorizations that could be material to the Company’s financial position, results of operations or cash flows in and following the period in which such outcome becomes estimable or known.

However, an unfavorable outcome could result in substantial fines and penalties or loss or suspension of export privileges or of particular authorizations that could be material to

the Company’s financial position, results of operations or cash flows in and following the period in which such outcome becomes estimable or known.

Environmental Remediation Obligations

At March 31, 2024, the Company’s reserves for environmental remediation obligations totaled $ 5.5 million, of which $ 1.7 million is included in current accrued liabilities.

At June 30, 2024, the Company’s reserves for environmental remediation obligations totaled $ 6.8 million, of which $ 3.1 million is included in current accrued liabilities.

At December 31, 2023, the Company’s reserves for environmental remediation obligations totaled $ 5.4 million.

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While the outcome of such matters cannot be predicted with certainty, and some of these lawsuits, claims or proceedings may be determined adversely to the Company, management does not believe that the disposition of any such pending matters is likely to have a material adverse effect on the Company’s financial statements.

Subsequent Events

On February 13, 2024, the Company announced that it entered into an agreement to acquire Adimec Holding B.V.

and its subsidiaries (“Adimec”).

Adimec, founded in 1992 and headquartered in Eindhoven, Netherlands, develops customized high-performance industrial and scientific cameras.

The closing of the transaction, which is subject to customary conditions and approvals, is anticipated to occur in the first half of 2024.

Adimec will be part of the Digital Imaging segment.

On April 10, 2024, the Company acquired Valeport Holdings 2019 Limited and its affiliates ("Valeport").

Valeport, founded in 1969 and headquartered in Totnes, United Kingdom, designs and manufactures underwater sensors for environmental, energy, construction and defense applications.

Valeport is part of the marine instrumentation product line within the Instrumentation segment.

Subsequent to the end of the first quarter of 2024, the Company made a $ 450 million debt maturity payment on the Senior Notes due April 2024.

On April 23, 2024, the Board of Directors of the Company authorized a stock repurchase program to repurchase up to $ 1.25 billion of Teledyne’s common stock.

This authorization superseded prior open stock repurchase programs authorized by the Board of Directors.

Management ’ s Discussion and Analysis of Financial Condition and Results of Operations

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We intend to strengthen and expand our business with targeted acquisitions and through product development.

We continue to focus on balanced and disciplined capital deployment among capital expenditures, acquisitions, product development and once again stock repurchases.

We continue to focus on balanced and disciplined capital deployment among capital expenditures, acquisitions, product development and stock repurchases.

We aggressively pursue operational excellence to continually improve our margins and earnings by emphasizing cost containment and evaluating cost reductions in all aspects of our business.

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We continually evaluate our businesses to ensure that they are aligned with our strategy.

Consistent with our strategy, we completed two acquisitions in 2023.

Consistent with our strategy, we completed two acquisitions each in 2024 and in 2023.

The financial results of the completed acquisitions have been included since the respective date of each acquisition.

Subsequent to the end of the first quarter of 2024, we completed one acquisition, which is part of the Instrumentation segment.

See Note 2 and Note 15 for additional information about our recent acquisitions.

Trends Affecting Our Business and Other Matters

We had previously assumed no full year sales growth in industrial automation as well as test and measurement markets.

However, those markets weakened more than planned in the first quarter, and we now forecast full year sales for products in these markets to decline meaningfully in 2024.

We had previously assumed no full year sales growth in industrial automation markets as well as electronic test and measurement markets.

However, those markets weakened more than planned in the first half of the year.

We have experienced supply chain challenges, including long lead times, as well as cost inflation for parts and components, logistics and labor due to availability constraints and high demand.

These supply chain challenges have also delayed our ability to timely convert backlog to revenue.

Although perhaps to a lesser extent compared to recent years, we expect cost inflation impacts and supply chain constraints to continue into 2024.

Although to a lesser extent compared to recent years, we expect cost inflation impacts and supply chain constraints to continue during the remainder of 2024.

Sales recorded and costs incurred recorded by subsidiaries operating outside of the United States are translated into U.S.

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We do not have material assets in Israel.

Our total net sales from Israel in the first three months of 2024 and the full year 2023 was approximately 1% of total net sales, respectively.

Our total net sales to Israel in the first six months of 2024 and the full year 2023 was approximately 1% of total net sales, respectively.

It is too early to determine the full extent of the impact this conflict could have on our business and our operations, including the impact to our suppliers from these regions, and our assessment of the potential impacts is ongoing.

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Results of Operations

First Quarter %

(in millions) 2024 2023 Change

Second Quarter % Six Months %

(in millions) 2024 2023 Change 2024 2023 Change

Net sales $ 1,374.1 $ 1,424.7 (3.6) % $ 2,724.2 $ 2,808.0 (3.0) %

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Interest and debt income (expense), net (15.8) (22.3) (29.1) % (28.5) (43.3) (34.2) %

Gain (loss) on debt extinguishment — 1.6 * — 1.6 *

Non-service retirement benefit income (expense) 2.7 2.9 (6.9) % 5.4 6.2 (12.9) %

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* not meaningful

First Quarter %

(dollars in millions) 2024 2023 Change

Second Quarter % Six Months %

(dollars in millions) 2024 2023 Change 2024 2023 Change

Net sales (a):

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Total operating income (loss) $ 247.0 $ 256.1 (3.6) % $ 481.3 $ 498.6 (3.5) %

(a) Net sales exclude inter-segment sales of $4.8 million and $6.2 million for the first quarter and first three months of 2024 and 2023, respectively,

First Quarter Results

The following is a discussion of our 2024 first quarter results compared with the first quarter results of 2023.

(a) Net sales exclude inter-segment sales of $8.5 million and $13.3 million for the second quarter and six months of 2024, respectively, and $8.1 million and $14.3 million for the second quarter and six months of 2023, respectively,

Second Quarter Results

The following is a discussion of our 2024 second quarter results compared with the second quarter results of 2023.

Comparisons are with the corresponding reporting period of 2023, unless noted otherwise.

First quarter of 2024 compared with the first quarter of 2023

Our first quarter of 2024 net sales decreased 2.4%.

Net income attributable to Teledyne for the first quarter of 2024 decreased 0.1%.

Net income per diluted share was $3.72 for the first quarter of 2024, compared with net income per diluted share of $3.73.

The first quarter of 2024 net sales, compared with the first quarter of 2023, reflected lower net sales in each segment other than the Aerospace and Defense Electronics segment.

Second quarter of 2024 compared with the second quarter of 2023

Our second quarter of 2024 net sales decreased 3.6%.

Net income attributable to Teledyne for the second quarter of 2024 decreased 2.8%.

Net income per diluted share was $3.77 for the second quarter of 2024, compared with net income per diluted share of $3.87.

The second quarter of 2024 net sales, compared with the second quarter of 2023, reflected lower net sales in the Digital Imaging and Engineered Systems segments, partially offset by higher net sales in the Aerospace and Defense Electronics and Instrumentation segments.

The second quarter of 2024 also included $11.7 million in incremental sales from recent acquisitions.

Cost of Sales

Cost of sales decreased $20.5 million in the first quarter of 2024 primarily driven by lower net sales.

Cost of sales as a percentage of net sales decreased slightly for the first quarter of 2024 to 57.0% from 57.2%.

Cost of sales decreased $24.8 million in the second quarter of 2024 primarily driven by lower net sales.

Cost of sales as a percentage of net sales increased for the second quarter of 2024 to 56.9% from 56.6%.

Selling, General and Administrative Expense

SG&A expense, including research and development expense, decreased $4.2 million in the first quarter of 2024.

SG&A expense as a percentage of net sales was 21.9% for the first quarter of 2024, compared with 21.8%.

Corporate expense, which is included in SG&A expense, was $20.1 million for the first quarter of 2024, compared with $17.4 million, with the increase primarily related to higher compensation expense, including higher stock-based compensation expense.

Stock-based compensation expense was $12.0 million for the first quarter of 2024 compared with $7.9 million.

The first quarter of 2024 also included $2.2 million of FLIR-related integration costs, including employee separation costs, facility consolidation costs and facility lease impairments with no comparable amount in the previous year.

SG&A expense, including research and development expense, decreased $16.5 million in the second quarter of 2024 due to lower sales as well as lower research and development expense, with the lower research and development expense primarily related to continued FLIR integration-related cost-reduction efforts implemented in the second half of 2023.

SG&A expense as a percentage of net sales decreased to 21.5% for the second quarter of 2024, compared with 22.0%, primarily due to lower research and development expense.

Corporate expense, which is included in SG&A expense, was $18.3 million for the second quarter of 2024, compared with $14.6 million, with the increase primarily related to higher compensation expense and increased legal contingencies for a legacy environmental reserve.

Stock-based compensation expense was $9.3 million for the second quarter of 2024 compared with $8.4 million.

Acquired Intangible Asset Amortization

Acquired intangible asset amortization for the first quarter of 2024 was $49.4 million compared with $49.7 million.

Acquired intangible asset amortization for the second quarter of 2024 was $49.1 million compared with $49.3 million.

Pension Service Expense

Pension service expense is included in both cost of sales and SG&A expense.

For the first quarter of 2024 and 2023, pension service expense was $1.5 million.

For the second quarter of 2024 and 2023, pension service expense was $1.5 million.

For 2024, the weighted-average discount rate used to determine the benefit obligation for the domestic qualified pension plans is 6.86% compared with 5.71% in 2023.

Operating Income

Operating income for the first quarter of 2024 decreased 3.4%.

The first quarter of 2024, compared with the first quarter of 2023, reflected lower operating income in the Digital Imaging and Engineered Systems segment, partially offset by higher operating income in the Aerospace and Defense Electronics and Instrumentation segments.

Operating income for the second quarter of 2024 decreased 3.6%.

The second quarter of 2024, compared with the second quarter of 2023, reflected lower operating income in the Digital Imaging and Engineered Systems segments, partially offset by higher operating income in the Aerospace and Defense Electronics and Instrumentation segments.

Non-operating Income and Expense

Interest and debt expense, net of interest income, was $12.7 million for the first quarter of 2024, compared with $21.0 million, with the decrease related to reduced outstanding borrowings with lower weighted average interest rates compared to the first quarter of 2023.

Non-service retirement benefit income was $2.7 million for the first quarter of 2024 compared with $3.3 million.

Other income and expense, net was income of $1.2 million for the first quarter of 2024 compared with expense of $1.1 million for the first quarter of 2023, with the difference primarily related foreign exchange gains in the first quarter of 2024 compared with foreign exchange losses in the first quarter of 2023.

The first quarter income tax provision considers income, permanent items, tax credits, and various statutory tax rates.

In both years, the first quarter discrete impact is primarily tax on stock-based compensation.

First Quarter

Interest and debt expense, net of interest income, was $15.8 million for the second quarter of 2024, compared with $22.3 million, with the decrease related to reduced outstanding borrowings with lower weighted average interest rates compared to the second quarter of 2023.

Non-service retirement benefit income was $2.7 million for the second quarter of 2024 compared with $2.9 million.

Other income and expense, net was expense of $2.2 million for the second quarter of 2024 compared with expense of $3.4 million for the second quarter of 2023.

The second quarter income tax provision considers income, permanent items, tax credits, and various statutory tax rates.

Second Quarter

(Dollars in millions) 2024 2023

Provision (benefit) for income taxes $ 46.4 $ 44.9

Discrete event expense (benefit):

$ (4.4) $ (6.5)

Provision (benefit) for income taxes without discrete event expense (benefit) $ 50.8 $ 51.4

Provision (benefit) for income taxes (a) $ 51.4 $ 49.4

Income (loss) before income taxes $ 231.7 $ 234.9

Effective tax rate 22.2% 21.0%

Effective tax rate without discrete events 22.5% 23.0%

(a) The second quarter of 2024 includes net discrete income tax benefits of $0.7 million and the second quarter of 2023 includes net discrete income tax benefits of $1.4 million.

First six months of 2024 compared with the first six months of 2023

The first six months of 2024 net sales decreased 3.0%.

Net income for the first six months of 2024 decreased 1.5%.

Net income per diluted share was $7.49 for the first six months of 2024, compared with net income per diluted share of $7.60.

The first six months of 2024 net sales, compared with the first six months of 2023 net sales, reflected lower net sales in the Digital Imaging and Engineered Systems segments, partially offset by higher net sales in the Aerospace and Defense Electronics and Instrumentation segments.

The first six months of 2024 also included $14.2 million in incremental sales from recent acquisitions.

Cost of Sales

Cost of sales decreased $45.3 million in the first six months of 2024 and reflected the impact of lower sales.

Cost of sales as a percentage of net sales increased slightly for the first six months of 2024 to 57.0% from 56.9%.

Selling, General and Administrative Expense

SG&A expense, including research and development expense, decreased $20.7 million in the first six months of 2024 due to lower sales as well as lower research and development expense, with the lower research and development expense primarily related to FLIR integration-related cost-reduction efforts implemented in the second half of 2023.

SG&A expense as a percentage of net sales for the first six months of 2024 and 2023 was 21.8%.

Corporate expense, which is included in SG&A expense, was $38.4 million for the first six months of 2024, compared with $32.0 million, with the increase primarily related to higher compensation expense, including higher stock-based compensation expense.

Stock-based compensation expense was $21.3 million for the first six months of 2024 compared with $16.3 million.

The first six months of 2024 also included $3.2 million of FLIR-related integration costs, including employee separation costs, facility consolidation costs and facility lease impairments.

Acquired Intangible Asset Amortization

Acquired intangible asset amortization for the first six months of 2024 was $98.5 million compared with $99.0 million.

Pension Service Expense

Pension service expense is included in both cost of sales and SG&A expense.

For the first six months of 2024, pension service expense was $3.0 million compared with $3.0 million.

For 2024, the weighted-average discount rate used to determine the benefit obligation for the domestic qualified pension plans is 6.86% compared with 5.71% in 2023.

Operating Income

Operating income for the first six months of 2024 decreased 3.5%.

The first six months of 2024, compared with the first six months of 2023, reflected lower operating income in the Digital Imaging and Engineered Systems segments, partially offset by higher operating income in the Aerospace and Defense Electronics and Instrumentation segments.

Non-operating Income and Expense

Interest and debt expense, net of interest income, was $28.5 million for the first six months of 2024, compared with $43.3 million, with the decrease related to reduced outstanding borrowings with lower weighted average interest rates compared to the first six months quarter of 2023.

Non-service retirement benefit income was $5.4 million for the first six months of 2024 compared with $6.2 million for the first six months of 2023.

Other income and expense, net was expense of $1.0 million for the first six months of 2024 compared with $4.5 million of other expense for the first six months of 2023, with the difference primarily related to lower foreign exchange losses in the first six months of 2024 compared with the first six months of 2023.

The first six months income tax provision considers income, permanent items, tax credits, and various statutory tax rates.

In both years, the first six months discrete impact is primarily tax on stock-based compensation.

(Dollars in millions) 2024 2023

Provision (benefit) for income taxes (a) $ 97.8 $ 94.3

Income (loss) before income taxes $ 457.2 $ 458.6

Effective tax rate 21.4% 20.6%

(a) The first six months of 2024 includes net discrete income tax benefits of $5.1 million and the first six months of 2023 includes net discrete income tax benefits of $8.0 million, respectively.

Segment Results

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Digital Imaging

First Quarter Change

Second Quarter Change Six Months Change

(dollars in millions) 2024 2023 $ % 2024 2023 $ %

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Operating income 15.4 % 15.7 % 15.4 % 15.8 %

First quarter of 2024 compared with the first quarter of 2023

Net sales decreased primarily due to lower sales of industrial imaging cameras due to end market weakness as well as lower sales of micro-electro-mechanical systems (“MEMS”), partially offset by higher sales of infrared detectors and subsystems as well as unmanned systems.

Second quarter of 2024 compared with the second quarter of 2023

Net sales decreased primarily due to lower sales of industrial automation imaging systems, X-ray products and commercial infrared imaging systems, partially offset by higher sales of infrared detectors and surveillance systems.

Sales of industrial automation imaging systems decreased $46.9 million, sales of X-ray products decreased $13.7 million, sales of commercial infrared imaging systems decreased $13.5 million, sales of surveillance systems increased $10.9 million and sales of infrared detectors increased $9.0 million.

Cost of sales decreased primarily due to decreased net sales partially offset by product mix.

As a result of less favorable product mix, the cost of sales percentage increased during the period.

SG&A expense and SG&A expense as a percentage of net sales decreased primarily due to lower research and development costs, partially offset by higher severance and facility consolidation cost.

Operating income decreased primarily due to unfavorable product mix during the period, and operating income as a percentage of net sales decreased slightly during the period.

As a result of unfavorable product mix, including lower industrial automation imaging systems net sales, the cost of sales percentage increased during the period.

SG&A expense decreased due to lower net sales as well $22.3 million in lower research and development costs.

SG&A expense as a percentage of net sales decreased primarily due to lower research and development cost.

Research and development costs decreased primarily due to FLIR integration-related cost-reduction efforts implemented in the second half of 2023.

Operating income decreased primarily due to lower net sales and unfavorable product mix during the period partially offset by lower research and development costs, and operating income as a percentage of net sales decreased during the period primarily due to unfavorable product mix partially offset by lower research and development costs.

First six months of 2024 compared with the first six months of 2023

Net sales decreased primarily due to lower sales of industrial automation imaging systems, commercial infrared imaging systems and X-ray products, partially offset by higher sales of infrared detectors and surveillance systems.

Sales of industrial automation imaging systems decreased $91.4 million, sales of commercial infrared imaging systems decreased $15.8 million, sales of X-ray products decreased $13.4 million, sales of infrared detectors increased $13.8 million and sales of surveillance systems increased $11.5 million.

Cost of sales decreased primarily due to decreased net sales partially offset by product mix.

As a result of unfavorable product mix, including lower industrial automation imaging systems net sales, the cost of sales percentage increased during the period.

SG&A expense decreased primarily due to lower net sales and $41.3 million in lower research and development costs.

SG&A expense as a percentage of net sales decreased primarily due primarily due to lower research and development costs.

Research and development costs decreased primarily due to FLIR integration-related cost-reduction efforts implemented in the second half of 2023.

Operating income decreased primarily due to lower net sales and unfavorable product mix during the period partially offset by lower research and development costs.

Operating income as a percentage of net sales decreased during the period primarily due to unfavorable product mix partially offset by lower research and development costs.

Instrumentation

First Quarter Change

Second Quarter Change Six Months Change

(dollars in millions) 2024 2023 $ % 2024 2023 $ %

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Operating income 26.1 % 24.8 % 26.1 % 24.5 %

First quarter of 2024 compared with the first quarter of 2023

Net sales decreased due to lower sales at our test and measurement instrumentation and environmental instrumentation product lines, partially offset by increased sales in our marine instrumentation product line.

Sales of marine instrumentation increased $19.6 million due to the ongoing recovery in offshore energy markets.

Sales of test and measurement instrumentation and environmental instrumentation decreased $15.9 million and $6.8 million, respectively, due to end market weakness.

Cost of sales decreased primarily due to lower net sales.

The cost of sales percentage decreased due to favorable product mix, including increased margins in our marine instrumentation product line.

Second quarter of 2024 compared with the second quarter of 2023

Net sales increased due to higher sales in our Marine Instrumentation product line, partially offset by lower sales at our Test and Measurement Instrumentation and Environmental Instrumentation product lines.

Sales of Marine Instrumentation increased $20.4 million due to the ongoing recovery in offshore energy markets as well as stronger defense market sales.

Sales of Test and Measurement Instrumentation and Environmental Instrumentation decreased $13.5 million and $1.8 million, respectively, with the decrease in Test and Measurement Instrumentation primarily due to end market weakness.

Cost of sales decreased primarily due to favorable product mix.

The cost of sales percentage decreased due to favorable product mix, including improved margins in our Marine Instrumentation product line.

SG&A expense increased slightly due to higher research and development expense in the period, and SG&A expense as a percentage of net sales also increased slightly.

Operating income increased primarily due to stronger marine instrumentation sales and improved margins, and operating income as a percentage of net sales increased due to improved product margins at marine instrumentation.

Operating income increased primarily due to higher Marine Instrumentation sales and improved margins, and operating income as a percentage of net sales increased due to improved product margins at Marine Instrumentation.

For six months of 2024 compared with the first six months of 2023

Sales of Marine Instrumentation increased $40.0 million due to the ongoing recovery in offshore energy markets as well as stronger defense market sales.

Sales of Test and Measurement Instrumentation decreased $29.4 million, and sales of Environmental Instrumentation decreased $8.6 million, respectively, primarily due to end market weakness.

Cost of sales decreased primarily due to favorable product mix, and the cost of sales percentage decreased due to favorable product mix, including increased margins in our Marine Instrumentation product line.

SG&A expense increased primarily due to higher net sales.

Operating income increased primarily due to higher net sales and favorable product mix, including improved margins in our Marine Instrumentation product line.

Operating income as a percentage of net sales increased primarily due to increased net sales and favorable product mix.

Aerospace and Defense Electronics

First Quarter Change

Second Quarter Change Six Months Change

(dollars in millions) 2024 2023 $ % 2024 2023 $ %

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Operating income 29.4 % 28.6 % 28.7 % 27.9 %

First quarter of 2024 compared with the first quarter of 2023

Net sales increased due to a $10.1 million increase in aerospace electronics and a $2.4 million increase in defense electronics.

Cost of sales increased primarily due to higher net sales, and the cost of sales percentage decreased due to favorable product mix, including higher sales at aerospace electronics.

SG&A expense increased primarily due to higher net sales.

Second quarter of 2024 compared with the second quarter of 2023

Net sales increased due to a $4.4 million increase in defense electronics and a $4.0 million increase in aerospace electronics.

Cost of sales increased slightly due to higher net sales partially offset by favorable product mix, and the cost of sales percentage decreased due to favorable product mix.

SG&A expense increased primarily due to higher net sales as well as a $2.4 million increase in research and development costs.

Operating income and operating income as a percent of net sales increased primarily due to increased net sales and favorable product mix during the period.

First six months of 2024 compared with the first six months of 2023

Net sales increased due to a $14.1 million increase for aerospace electronics and a $6.8 million increase for defense electronics.

Cost of sales increased primarily due to higher net sales partially offset by favorable product mix and improved margins, and the cost of sales percentage decreased as a result.

SG&A expense as well as the SG&A expense percentage increased primarily due to a $3.2 million increase in research and development costs.

Operating income and operating income as a percent of net sales increased primarily due to increased net sales during the period, favorable product mix and improved product margins.

Engineered Systems

First Quarter Change

Second Quarter Change Six Months Change

(dollars in millions) 2024 2023 $ % 2024 2023 $ %

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Operating income 7.0 % 9.8 % 5.1 % 9.7 %

First quarter of 2024 compared with the first quarter of 2023

Second quarter of 2024 compared with the second quarter of 2023

Net sales decreased due to lower sales of $8.9 million for engineered products and lower sales of $1.3 million for energy systems.

Cost of sales decreased primarily due to lower net sales as well as certain unfavorable changes in contract estimates.

The cost of sales percentage increased during the period due primarily to product mix and unfavorable changes in contract estimates.

SG&A expense increased slightly, and SG&A expense as a percentage of net sales increased.

Operating income and operating income as a percentage of net sales decreased primarily due to program mix and unfavorable estimate changes related to electronic manufacturing services contracts.

Cost of sales decreased primarily due to lower net sales as well as unfavorable program mix.

The cost of sales percentage increased during the period due primarily to unfavorable program mix.

SG&A expense increased due to higher selling expense, and SG&A expense as a percentage of net sales increased.

Operating income and operating income as a percentage of net sales decreased primarily due to unfavorable program mix.

First six months of 2024 compared with the first six months of 2023

Net sales decreased primarily due to lower sales of $19.0 million for engineered products and lower sales of $2.1 million for energy systems.

Cost of sales decreased primarily due to lower net sales.

The cost of sales percentage increased slightly.

SG&A expense increased primarily due to higher net sales.

SG&A expense as a percentage of net sales increased.

Operating income decreased primarily due to lower net sales.

Operating income as a percentage of net sales decreased slightly.

Financial Condition, Liquidity and Capital Resources

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To support acquisitions, we may need to raise additional capital.

No cash pension contributions

have been made since 2013 or are planned for the remainder of 2024 for the domestic qualified pension plans.

No cash pension contributions have been made since 2013 or are planned for the remainder of 2024 for the domestic qualified pension plans.

Cash and Cash Equivalents

Cash and cash equivalents totaled $912.4 million at March 31, 2024 compared with $648.3 million at December 31, 2023.

Cash and cash equivalents totaled $443.2 million at June 30, 2024 compared with $648.3 million at December 31, 2023.

Cash equivalents consist of highly liquid money-market mutual funds with maturities of three months or less when purchased.

Long-term Debt

Total debt at March 31, 2024 was $3,246.3 million compared with $3,244.9 million at December 31, 2023.

Subsequent to the end of the first quarter of 2024, the Company made a $450 million debt maturity payment on the Senior notes due April 2024.

At March 31, 2024, $1,128.2 million was available under the $1.15 billion credit facility, after reductions of $21.8 million in outstanding letters of credit.

Our bank credit agreements, which includes our $1.15 billion credit facility expiring March 2026 and our $150.0 million term loan due October 2024, require us to comply with various financial and operating covenants.

At March 31, 2024, we were in compliance with these covenants.

Total debt at June 30, 2024 was $2,797.4 million compared with $3,244.9 million at December 31, 2023.

In the first half of 2024, we made a $450 million debt maturity payment on the Senior notes due April 2024.

At June 30, 2024, $1,177.7 million was available under the $1.20 billion credit facility, after reductions of $22.3 million in outstanding letters of credit.

Our bank credit agreements, which includes our $1.20 billion credit facility expiring June 2029 and our $150.0 million term loan due October 2024, require us to comply with various financial and operating covenants.

At June 30, 2024, we were in compliance with these covenants.

Our liquidity is not dependent upon the use of off-balance sheet financial arrangements.

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Stock Repurchases

In April 2024, our Board of Directors approved a stock repurchase program authorizing the Company to repurchase up to $1.25 billion of Teledyne’s common stock.

In April 2024, our Board of Directors approved a stock repurchase program authorizing the Company to repurchase up to $1.25 billion of our common stock.

This authorization superseded prior open stock repurchase programs authorized by the Board of Directors.

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The Company currently intends to fund future share repurchases with cash on hand and available borrowings under the Company's credit facility.

No repurchases under any authorizations were made in the first quarter of 2024.

Net cash provided by operating activities was $291.0 million for the first three months of 2024 compared with $203.0 million, driven primarily by stronger working capital conversion in the first three months of 2024.

Net cash used in investing activities was $15.9 million for the first three months of 2024 compared with $76.9 million.

During the first three months of 2024, we spent $0.0 million on acquisitions as compared with $52.5 million.

Capital expenditures for the first three months of 2024 and 2023 were $15.9 million and $24.4 million, respectively.

We currently intend to fund future share repurchases with cash on hand and available borrowings under our credit facility.

During the second quarter of 2024, we repurchased approximately 0.5 million shares for $193.8 million with a weighted-average price of $391.92 per share.

Subsequent to the end of the second quarter of 2024, we repurchased approximately 0.2 million shares for $84.5 million with a weighted-average price of $394.43 per share.

Net cash provided by operating activities was $609.7 million for the first six months of 2024 compared with $393.5 million, driven primarily by stronger working capital conversion in the first six months of 2024, including stronger account receivable collection and higher contract liabilities from customer advances.

Net cash used in investing activities was $157.1 million for the first six months of 2024 compared with $104.5 million.

During the first six months of 2024, we spent $123.6 million on acquisitions as compared with $53.5 million.

Capital expenditures for the first six months of 2024 and 2023 were $33.6 million and $51.7 million, respectively.

We currently plan to invest approximately $100 million for capital expenditures in 2024.

Net cash provided by financing activities was $6.1 million for the first three months of 2024 compared with net cash used in financing activities of $103.4 million, with the first three months of 2023 including a $100.0 million payment on our credit facility.

Net cash used in financing activities was $637.9 million for the first six months of 2024 compared with net cash used in financing activities of $567.8 million, with the first six months of 2024 including a $450 million debt maturity payment on the Senior Notes due April 2024, and share repurchases of $193.8 million.

During the first six months of 2023, we repaid $570.0 million of debt, including paying $300.0 million of debt that matured in April 2023 and making $260.0 million of floating rate debt payments which reduced our term loan due June 2029 by $135.0 million and reduced our outstanding credit facility

balance by $125.0 million.

In addition, during the second quarter of 2023, we repurchased and retired $10.0 million of our Fixed Rate Senior Notes due April 2031, and we recorded a $1.6 million non-cash gain on the extinguishment of this debt.

Critical Accounting Policies and Estimates

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and accounting for income taxes.

For additional discussion of the application of the critical accounting policies and other accounting policies, see Note 1 to these condensed consolidated Financial Statements and also Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Note 2 of the Notes to Consolidated Financial Statements included in Teledyne’s 2023 Form 10-K.

For additional discussion of the application of the critical accounting policies and other accounting policies, see Note 1 to the condensed consolidated Financial Statements and also Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Note 2 of the Notes to Consolidated Financial Statements included in Teledyne’s 2023 Form 10-K.

Safe Harbor Cautionary Statement Regarding Forward-Looking Information

From time to time we make, and this report contains, forward looking statements, as defined in the Private Securities Litigation Reform Act of 1995, directly or indirectly relating to sales, earnings, operating margin, growth opportunities, acquisitions, product sales, capital expenditures, stock repurchases, pension matters, stock-based compensation expense, the credit facility, interest expense, severance, relocation and facility consolidation costs, environmental remediation costs, taxes, exchange rate fluctuations and strategic plans.

From time to time we make, and this report contains, forward looking statements, as defined in the Private Securities Litigation Reform Act of 1995, directly or indirectly relating to sales, sales growth, earnings, operating margin, growth opportunities, acquisitions, product sales, capital expenditures, stock repurchases, pension matters, stock-based compensation expense, the credit facility, interest expense, severance, relocation and facility consolidation costs, environmental remediation costs, taxes, exchange rate fluctuations and strategic plans.

Forward-looking statements are generally accompanied by words such as “estimate”, “project”, “predict”, “believe” or “expect”, that convey the uncertainty of future events or outcomes.

All statements made in

this Management’s Discussion and Analysis of Financial Condition and Results of Operations and in other sections of this Form 10-Q that are not historical in nature should be considered forward-looking.

All statements made in this Management’s Discussion and Analysis of Financial Condition and Results of Operations and in other sections of this Form 10-Q that are not historical in nature should be considered forward-looking.

Actual results could differ materially from these forward-looking statements.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements