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Item 1. Financial Statements

2024-10-28 compared with 2024-07-29 · 247 added, 226 removed, 810 unchanged (37% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

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

FOR THE THIRD QUARTER AND NINE MONTHS ENDED SEPTEMBER 29, 2024 AND OCTOBER 1, 2023

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

Second Quarter Six Months

Third Quarter Nine Months

2024 2023 2024 2023

24 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

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

FOR THE THIRD QUARTER AND NINE MONTHS ENDED SEPTEMBER 29, 2024 AND OCTOBER 1, 2023

(Unaudited - Amounts in millions)

Second Quarter Six Months

Third Quarter Nine Months

2024 2023 2024 2023

12 unchanged sentences

(Unaudited - Amounts in millions, except share amounts)

June 30, 2024 December 31, 2023

September 29, 2024 December 31, 2023

Current Assets

5 unchanged sentences

Total current assets 2,990.2 2,981.4

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

Property, plant and equipment, net of accumulated depreciation and amortization of $ 1,015.0 at September 29, 2024 and $ 947.1 at December 31, 2023

Goodwill 8,121.3 8,002.8

20 unchanged sentences

issued shares:

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

47,432,888 at September 29, 2024 and 47,331,845 at December 31, 2023;

outstanding shares:

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

46,624,244 at September 29, 2024 and 47,331,845 at December 31, 2023

Additional paid-in capital 4,440.4 4,407.3

Retained earnings 6,068.2 5,447.5

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

Treasury stock, 808,644 shares at September 29, 2024 and none at December 31, 2023

Accumulated other comprehensive income (loss) ( 593.3 ) ( 634.1 )

4 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In millions)

(Unaudited - Amounts in millions)

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

12 unchanged sentences

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

Net income (loss) — — — 262.0 — 262.0

Other comprehensive income (loss), net of tax — — — — 137.7 137.7

Treasury stock issued — ( 9.1 ) 9.1 — — —

Treasury stock repurchased — — ( 138.8 ) — — ( 138.8 )

Stock-based compensation — 8.7 — — — 8.7

Exercise of stock options — 4.9 — — — 4.9

Balance, September 29, 2024 $ 0.5 $ 4,440.4 $ ( 321.6 ) $ 6,068.2 $ ( 593.3 ) $ 9,594.2

TELEDYNE TECHNOLOGIES INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (continued)

(Unaudited - Amounts in millions)

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

12 unchanged sentences

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

Net income (loss) — — — 198.6 — 198.6

Other comprehensive income (loss), net of tax — — — — ( 75.9 ) ( 75.9 )

Treasury stock issued — ( 5.7 ) 5.7 — — —

Stock-based compensation — 8.0 — — — 8.0

Exercise of stock options — 12.2 — — — 12.2

Balance, October 1, 2023 $ 0.5 $ 4,385.7 $ ( 0.8 ) $ 5,124.4 $ ( 787.9 ) $ 8,721.9

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

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

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

FOR THE NINE MONTHS ENDED SEPTEMBER 29, 2024 AND OCTOBER 1, 2023

(Unaudited - Amounts in millions)

35 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

June 30, 2024

September 29, 2024

Basis of Presentation

2 unchanged sentences

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 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.

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 September 29, 2024 and the consolidated results of operations, consolidated comprehensive income (loss) and consolidated cash flows for the third quarter and nine months ended September 29, 2024.

The results of operations and cash flows for the periods ended September 29, 2024 and cash flows for the nine months ended September 29, 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

9 unchanged sentences

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, which requires public entities, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction focuses on the rate reconciliation and income taxes paid.

ASU 2023-09 is effective for annual periods beginning after December 15, 2024, with early adoption permitted.

51 unchanged sentences

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

Second Quarter % Six Months %

Third Quarter % Nine Months %

2024 2023 Change 2024 2023 Change

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Operating income $ 270.7 $ 264.3 2.4 % $ 752.0 $ 762.9 ( 1.4 ) %

(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.

Corporate assets primarily consist of cash and cash equivalents, deferred taxes, net pension assets/liabilities and other assets (in millions):

Identifiable assets:

June 30, 2024 December 31, 2023

Digital Imaging $ 11,236.1 $ 11,382.2

Instrumentation 1,734.6 1,692.3

Aerospace and Defense Electronics 560.4 569.1

Engineered Systems 208.3 184.8

Corporate 481.7 699.5

Total identifiable assets $ 14,221.1 $ 14,527.9

(a) Net sales exclude inter-segment sales of $ 5.9 million and $ 19.2 million for the third quarter and first nine months of 2024, respectively, and $ 7.2 million and $ 21.5 million for the third quarter and first nine months of 2023, respectively.

Product Lines

3 unchanged sentences

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

Second Quarter Six Months

Third Quarter Nine Months

Instrumentation 2024 2023 2024 2023

3 unchanged sentences

Total $ 349.8 $ 329.1 $ 1,013.7 $ 991.0

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

Corporate assets primarily consist of cash and cash equivalents, deferred taxes, net pension assets/liabilities and other assets (in millions):

Identifiable assets:

September 29, 2024 December 31, 2023

Digital Imaging $ 11,322.9 $ 11,382.2

Instrumentation 1,800.8 1,692.3

Aerospace and Defense Electronics 577.1 569.1

Engineered Systems 202.0 184.8

Corporate 628.1 699.5

Total identifiable assets $ 14,530.9 $ 14,527.9

Revenue Recognition and Contract Balances

1 unchanged sentence

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.

Second Quarter Ended

June 30, 2024

Second Quarter Ended

June 30, 2024

Third Quarter Ended

September 29, 2024

Third Quarter Ended

September 29, 2024

Customer Type Geographic Region (c)

9 unchanged sentences

Six Months Ended

June 30, 2024

Six Months Ended

June 30, 2024

Nine Months Ended

September 29, 2024

Nine Months Ended

September 29, 2024

Customer Type Geographic Region (c)

9 unchanged sentences

Second Quarter Ended

Third Quarter Ended

October 1, 2023

Third Quarter Ended

October 1, 2023

Customer Type Geographic Region (c)

9 unchanged sentences

Six Months Ended

Nine Months Ended

October 1, 2023

Nine Months Ended

October 1, 2023

Customer Type Geographic Region (c)

11 unchanged sentences

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

For the nine months ended September 29, 2024, approximately 51 % of net sales in the Engineered Systems segment were derived from fixed price contracts.

Contract Liabilities

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

Contract Liabilities by Balance Sheet Location (in millions) September 29, 2024

December 31, 2023

2 unchanged sentences

Total contract liabilities $ 356.1 $ 266.6

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.

The Company recognized revenue of $ 130.3 million during the nine months ended September 29, 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 June 30, 2024, the aggregate amount of the transaction price allocated to remaining performance obligations was $ 3,419.3 million.

As of September 29, 2024, the aggregate amount of the transaction price allocated to remaining performance obligations was $ 3,578.4 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 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.

The net aggregate effects of these changes in estimates on contracts accounted for under the cost-to-cost method in the first nine months of 2024 was $ 5.1 million of favorable operating income compared with $ 1.7 million of favorable operating income in the first nine months of 2023.

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

Goodwill and Acquired Intangible Assets

5 unchanged sentences

Foreign currency changes and other 21.4 7.8 1.6 — 30.8

Balance at June 30, 2024

Balance at September 29, 2024

$ 6,963.1 $ 975.6 $ 165.0 $ 17.6 $ 8,121.3

Acquired intangible assets

(in millions):

June 30, 2024 December 31, 2023

Acquired intangible assets consisted of the following (in millions):

September 29, 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.

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 %.

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 in the Digital Imaging segment 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.

As of September 29, 2024, the FLIR reporting unit had $ 5,884.9 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.

2 unchanged sentences

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.

For all reporting units, including the FLIR reporting unit, there have been no events or changes in circumstances which indicate that it is more likely than not that the fair value of the reporting unit is below its carrying value.

As such, no interim impairment review was required.

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.

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.

6 unchanged sentences

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.

For all indefinite-lived trademarks, including the FLIR trademark, there have been no events or changes in circumstances which indicate that it is more likely than not that the fair value of the trademark is below its carrying value.

As such, no interim impairment review was required.

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

1 unchanged sentence

Cash Equivalents

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

The Company had $ 173.2 million and $ 265.1 million of cash equivalents at September 29, 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 $ 12.4 million at June 30, 2024 and $ 11.5 million at December 31, 2023.

Accounts receivable is presented net of an allowance for doubtful accounts of $ 14.8 million at September 29, 2024 and $ 11.5 million at December 31, 2023.

Inventories, net

Inventories are stated at current cost, net of reserves for excess, slow moving and obsolete inventory.

Inventories are primarily valued under the FIFO method or average cost method.

Inventories are primarily valued under the first-in, first-out (“FIFO”) method or average cost method.

Inventory balances are summarized as follows (in millions):

June 30, 2024 December 31, 2023

September 29, 2024 December 31, 2023

Raw materials and supplies $ 582.7 $ 560.6

14 unchanged sentences

Long-Term Debt (in millions):

June 30, 2024 December 31, 2023

September 29, 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 %

Term loan due October 2024, variable rate of 6.60 % at September 29, 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

9 unchanged sentences

Total long-term debt, net of current portion $ 2,647.9 $ 2,644.8

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.

At September 29, 2024, $ 1,171.1 million was available under the $ 1.20 billion credit facility, after a reduction of $ 28.9 million in outstanding letters of credit.

The Company’s bank credit agreements requires it to comply with various financial and operating covenants and at September 29, 2024, the Company was in compliance with these covenants.

During the first nine months 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 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.

As of September 29, 2024 and December 31, 2023, the aggregate fair values of our borrowings were $ 2,600.3 million and $ 2,965.3 million, respectively, and the carrying values were $ 2,816.1 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.

Second Quarter Six Months

Third Quarter Nine Months

(dollars in millions) 2024 2023 2024 2023

2 unchanged sentences

Effective tax rate ( 2.8 )% 19.2 % 12.7 % 20.1 %

(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.

(a) The third quarter of 2024 includes net discrete income tax benefits of $ 62.3 million and the first nine months of 2024 includes net discrete income tax benefits of $ 67.4 million, respectively, with the income tax benefits primarily related to the release of a net income tax reserve liability (including applicable interest and penalties) as a result of a favorable resolution reached by the Company with foreign tax authorities around transfer pricing between certain FLIR subsidiaries.

The third quarter of 2023 includes net discrete income tax benefits of $ 6.1 million and the first nine months of 2023 includes net discrete income tax benefits of $ 14.1 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”).

9 unchanged sentences

Pension Plans

Second Quarter Six Months

Third Quarter Nine Months

2024 2023 2024 2023

12 unchanged sentences

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

Stock-based compensation expense was $ 8.7 million and $ 30.0 million for the third quarter and first nine months of 2024, respectively, and $ 8.0 million and $ 24.3 million for the third quarter and first nine months of 2023, respectively.

Stock option activity for the third quarter and first nine months of 2024 is as follows:

Third Quarter Nine Months

Shares Weighted Average Exercise Price Shares Weighted Average

6 unchanged sentences

Exercisable at end of period 1,113,658 $ 251.48 1,113,658 $ 251.48

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

Second Quarter Six Months

Restricted stock activity for the third quarter and first nine months of 2024 is as follows:

Third Quarter Nine Months

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

6 unchanged sentences

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

Second Quarter Six Months

Third Quarter Nine Months

2024 2023 2024 2023

2 unchanged sentences

Weighted average diluted common shares outstanding 47.3 47.9 47.7 47.9

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.

For the third quarter and first nine 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

2 unchanged sentences

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 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.

1 unchanged sentence

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.

During the third quarter of 2024, the Company repurchased approximately 0.3 million shares for $ 138.8 million with a weighted-average price of $ 404.67 per share.

During the first nine months of 2024, the Company repurchased approximately 0.8 million shares for $ 332.6 million with a weighted-average price of $ 397.14 per share.

Subsequent to the end of the third quarter of 2024, the Company repurchased less than 0.1 million shares for $ 21.4 million with a weighted-average price of $ 445.85 per share.

Accumulated Other Comprehensive Income (Loss)

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):

The changes in accumulated other comprehensive income (loss) (“AOCI”) by component, net of tax, for the third quarter and nine months ended September 29, 2024 and October 1, 2023 are as follows (in millions):

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

Balance at March 31, 2024

Balance at June 30, 2024

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

2 unchanged sentences

Net other comprehensive income (loss) 136.2 — 1.5 137.7

Balance at June 30, 2024

Balance at September 29, 2024

$ ( 351.1 ) $ 1.7 $ ( 243.9 ) $ ( 593.3 )

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

Balance at April 2, 2023

Balance at July 2, 2023

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

2 unchanged sentences

Net other comprehensive income (loss) ( 76.6 ) ( 1.1 ) 1.8 ( 75.9 )

Balance at July 2, 2023

Balance at October 1, 2023

$ ( 540.9 ) $ 4.3 $ ( 251.3 ) $ ( 787.9 )

5 unchanged sentences

Net other comprehensive income (loss) 41.6 ( 6.5 ) 5.7 40.8

Balance at June 30, 2024

Balance at September 29, 2024

$ ( 351.1 ) $ 1.7 $ ( 243.9 ) $ ( 593.3 )

5 unchanged sentences

Net other comprehensive income (loss) ( 68.6 ) 3.0 4.2 ( 61.4 )

Balance at July 2, 2023

Balance at October 1, 2023

$ ( 540.9 ) $ 4.3 $ ( 251.3 ) $ ( 787.9 )

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

June 30, 2024 July 2, 2023

The reclassifications out of AOCI to net income for the third quarter ended September 29, 2024 and October 1, 2023 are as follows (in millions):

Amount Reclassified from AOCI for the Quarter Ended September 29, 2024

Amount Reclassified from AOCI for the Quarter Ended

October 1, 2023

Statement of Income (Loss) Presentation

(Gain) loss on cash flow hedges:

8 unchanged sentences

Total $ 1.5 $ 1.8

Amount Reclassified from AOCI for the Six Months Ended

Amount Reclassified from AOCI for the Nine Months Ended September 29, 2024

Amount Reclassified from AOCI for the Nine Months Ended October 1, 2023

Statement of Income (Loss) Presentation

June 30, 2024 July 2, 2023

(Gain) loss on cash flow hedges:

17 unchanged sentences

These contracts are designated and qualify as cash flow hedges.

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

As of September 29, 2024, the Company had foreign currency forward contracts to buy Canadian dollars and to sell U.S.

dollars totaling $ 68.1 million.

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.

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

As of September 29, 2024, the Company had foreign currency forward contracts to buy British pounds and to sell U.S.

dollars totaling $ 5.5 million.

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

These foreign currency forward contracts have maturities ranging from December 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.

4 unchanged sentences

This cross currency swap is designated as cash flow hedge.

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.

As of September 29, 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.

3 unchanged sentences

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 second quarter and six months ended June 30, 2024 and July 2, 2023 was as follows (in millions):

Second Quarter Six Months

The effect of derivative instruments designated as cash flow hedges in the condensed consolidated financial statements for the third quarter and nine months ended September 29, 2024 and October 1, 2023 was as follows (in millions):

Third Quarter Nine Months

2024 2023 2024 2023

11 unchanged sentences

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

As of September 29, 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$ 152.4

Dollars US$ 4.1 Euros € 4.1

Norwegian Krone kr 297.7 U.S.

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Dollars US$ 74.2

Dollars US$ 10.9 Euros € 10.0

The preceding table includes non-designated hedges derived from terms contained in previously designated cash flow hedges.

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 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 effect of derivative instruments not designated as accounting hedges recognized in other income and expense for the third quarter and nine months ended September 29, 2024 was income of $ 15.3 million and $ 3.2 million, respectively.

The effect of derivative instruments not designated as accounting hedges in other income and expense for the third quarter and nine months ended October 1, 2023 was expense of $ 12.9 million and $ 3.1 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 June 30, 2024 December 31, 2023

Asset/(Liability) Derivative Instruments Balance sheet location September 29, 2024 December 31, 2023

Derivatives designated as hedging instruments:

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Cash flow forward contracts Other non-current assets 0.4 2.4

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 assets 0.3 0.1

Currency / interest rate contracts Other current liabilities ( 24.2 ) ( 21.3 )

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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 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 September 29, 2024, the Company’s reserves for environmental remediation obligations totaled $ 6.7 million, of which $ 3.0 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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Legal Matters

A number of other lawsuits, claims and proceedings have been or may be asserted against the Company, including those pertaining to product liability, acquisitions, patent infringement, contracts, environmental, employment and employee benefits matters.

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.

The Company is working to resolve a civil investigation by the U.S.

Department of Justice relating to an ejection seat sequencer program and deliveries to the U.S.

Government between 2006 and 2018.

While the outcome of litigation, claims, proceedings and investigations cannot be predicted with certainty, and some of these matters 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 condition.

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

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

Those markets weakened more than planned in the first half of the year, however, we believe those markets have stabilized or are beginning to recover.

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 to Israel in the first six 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 nine months of 2024 and the full year 2023 were 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

Second Quarter % Six Months %

(in millions) 2024 2023 Change 2024 2023 Change

Third Quarter % Nine Months %

(dollars in millions) 2024 2023 Change 2024 2023 Change

Net sales $ 1,443.5 $ 1,402.5 2.9 % $ 4,167.7 $ 4,210.5 (1.0) %

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* not meaningful

Second Quarter % Six Months %

Third Quarter % Nine Months %

(dollars in millions) 2024 2023 Change 2024 2023 Change

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Total operating income (loss) $ 270.7 $ 264.3 2.4 % $ 752.0 $ 762.9 (1.4) %

(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.

(a) Net sales exclude inter-segment sales of $5.9 million and $19.2 million for the third quarter and nine months of 2024, respectively, and $7.2 million and $21.5 million for the third quarter and nine months of 2023, respectively.

Third Quarter Results

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

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

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.

Third quarter of 2024 compared with the third quarter of 2023

Our third quarter of 2024 net sales increased 2.9%.

Net income attributable to Teledyne for the third quarter of 2024 increased 31.9%, driven primarily by the favorable resolution of an uncertain tax position reached by the Company with foreign tax authorities around transfer pricing between certain FLIR subsidiaries.

Net income per diluted share was $5.54 for the third quarter of 2024, compared with net income per diluted share of $4.15.

The third quarter of 2024 net sales, compared with the third quarter of 2023, reflected higher net sales in each segment other than the Digital Imaging segment.

The third quarter of 2024 included $18.0 million in incremental sales from recent acquisitions.

Cost of Sales

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%.

Cost of sales increased $26.7 million in the third quarter of 2024 primarily driven by higher net sales.

Cost of sales as a percentage of net sales increased for the third quarter of 2024 to 57.1% from 56.8%.

Selling, General and Administrative Expense

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.

SG&A expense, including research and development expense, increased $7.2 million in the third quarter of 2024 due to higher sales.

SG&A expense as a percentage of net sales decreased to 20.7% for the third quarter of 2024, compared with 20.8%.

Corporate expense, which is included in SG&A expense, was $18.7 million for the third quarter of 2024, compared with $17.8 million, with the increase primarily related to higher compensation expense.

Stock-based compensation expense was $8.7 million for the third quarter of 2024 compared with $8.0 million.

Acquired Intangible Asset Amortization

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

Acquired intangible asset amortization for the third quarter of 2024 was $49.8 million compared with $49.1 million.

Pension Service Expense

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

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

For the third 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 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.

Operating income for the third quarter of 2024 increased 2.4%.

The third quarter of 2024, compared with the third quarter of 2023, reflected higher operating income in each segment other than the Digital Imaging segment.

Non-operating Income and Expense

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

Interest and debt expense, net of interest income, was $15.7 million for the third quarter of 2024, compared with $18.4 million, with the decrease related to reduced outstanding borrowings compared to the third quarter of 2023.

Non-service retirement benefit income was $2.8 million for the third quarter of 2024 compared with $3.1 million.

Other income and expense, net was expense of $2.7 million for the third quarter of 2024 compared with expense of $2.9 million for the third quarter of 2023.

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

Third Quarter

(dollars in millions) 2024 2023

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Effective tax rate (2.8)% 19.2%

(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.

(a) The third quarter of 2024 includes net discrete income tax benefits of $62.3 million and the third quarter of 2023 includes net discrete income tax benefits of $6.1 million.

During the third quarter of 2024, the Company released $62.5 million of net income tax reserve liability (including applicable interest and penalties) as a result of a favorable resolution reached by the Company with foreign tax authorities around transfer pricing between certain FLIR subsidiaries.

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

The first nine months of 2024 net sales decreased 1.0%.

Net income for the first nine months of 2024 increased 10.3%, driven primarily by the favorable resolution of an uncertain tax position reached by the Company with foreign tax authorities around transfer pricing between certain FLIR subsidiaries.

Net income per diluted share was $13.01 for the first nine months of 2024, compared with net income per diluted share of $11.75.

The first nine months of 2024 net sales, compared with the first nine months 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 first nine months of 2024 included $32.1 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%.

Cost of sales decreased $18.6 million in the first nine months of 2024 and reflected the impact of lower sales.

Cost of sales as a percentage of net sales increased for the first nine 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.

SG&A expense, including research and development expense, decreased $13.5 million in the first nine 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 nine months of 2024 was 21.4% compared with 21.5%.

Corporate expense, which is included in SG&A expense, was $57.1 million for the first nine months of 2024, compared with $49.8 million, with the increase primarily related to higher compensation expense, including higher stock-based compensation expense and increased legal contingencies for a legacy environmental reserve.

Stock-based compensation expense was $30.0 million for the first nine months of 2024 compared with $24.3 million.

The first nine months of 2024 also included $6.9 million of FLIR-related integration costs, including employee separation costs, facility consolidation costs and facility lease impairments, compared with $5.8 million.

Acquired Intangible Asset Amortization

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

Acquired intangible asset amortization for the first nine months of 2024 was $148.3 million compared with $148.1 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 both the first nine months of 2024 and 2023, pension service expense was $4.5 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 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.

Operating income for the first nine months of 2024 decreased 1.4%.

The first nine months of 2024, compared with the first nine 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.

Interest and debt expense, net of interest income, was $44.2 million for the first nine months of 2024, compared with $61.7 million, with the decrease related to reduced outstanding borrowings with lower weighted average interest rates compared to the first nine months of 2023.

Non-service retirement benefit income was $8.2 million for the first nine months of 2024 compared with $9.3 million for the first nine months of 2023.

Other income and expense, net was expense of $3.7 million for the first nine months of 2024 compared with $7.4 million of other expense for the first nine months of 2023, with the difference primarily related to lower foreign exchange losses in the first nine months of 2024 compared with the first nine months of 2023.

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

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

(dollars in millions) 2024 2023

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Effective tax rate 12.7% 20.1%

(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.

(a) The first nine months of 2024 includes net discrete income tax benefits of $67.4 million and the first nine months of 2023 includes net discrete income tax benefits of $14.1 million, respectively.

During the first nine months of 2024, the Company released $62.5 million of net income tax reserve liability (including applicable interest and penalties) as a result of a favorable resolution reached by the Company with foreign tax authorities around transfer pricing between certain FLIR subsidiaries.

Segment Results

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Digital Imaging

Second Quarter Change Six Months Change

Third Quarter Change Nine Months Change

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

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Operating income 16.1 % 17.6 % 15.6 % 16.4 %

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.

Third quarter of 2024 compared with the third quarter of 2023

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

Sales of industrial automation imaging systems decreased $45.3 million, sales of X-ray products decreased $9.7 million, sales of unmanned air systems increased $15.6 million, sales of surveillance systems increased $8.9 million, sales of commercial infrared imaging systems increased $6.2 million and sales of infrared detectors increased $5.3 million.

The third quarter of 2024 also included $10.8 million in incremental sales from recent acquisitions.

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

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.

SG&A expense decreased due to lower net sales.

SG&A expense as a percentage of net sales increased slightly during the quarter.

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

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

Net sales decreased primarily due to lower sales of industrial automation imaging systems, X-ray products and geospatial products, partially offset by higher sales of unmanned air systems, surveillance systems, infrared detectors and incremental sales from recent acquisitions.

Sales of industrial automation imaging systems decreased $136.7 million, sales of X-ray products decreased $23.1 million, sales of commercial infrared imaging systems decreased $9.6 million, sales of geospatial products decreased $8.0 million, sales of unmanned air systems increased $33.7 million, sales of surveillance systems increased $20.4 million and sales of infrared detectors increased $19.2 million.

The first nine months of 2024 also included $14.8 million in incremental sales from recent acquisitions.

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

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Instrumentation

Second Quarter Change Six Months Change

Third Quarter Change Nine Months Change

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

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Operating income 27.5 % 26.0 % 26.6 % 25.0 %

Second quarter of 2024 compared with the second quarter of 2023

Third quarter of 2024 compared with the third 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.

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Sales of Test and Measurement Instrumentation and Environmental Instrumentation decreased $7.2 million and $4.0 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 third quarter of 2024 included $7.2 million in incremental sales from recent acquisitions.

Cost of sales increased primarily due to higher net sales partially offset by 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 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

SG&A expense increased slightly due to higher net sales in the period, and SG&A expense as a percentage of net sales decreased as research and development expense was relatively consistent in both periods while net sales increased.

Operating income increased primarily due to higher Marine Instrumentation sales, favorable product mix and improved Marine Instrumentation margins, and operating income as a percentage of net sales increased due to favorable product mix and improved Marine Instrumentation margins as well as lower research and development expense as a percentage of net sales.

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

Sales of Marine Instrumentation increased $71.9 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.

Sales of Test and Measurement Instrumentation decreased $36.6 million, and sales of Environmental Instrumentation decreased $12.6 million, respectively, with the decrease in Test and Measurement Instrumentation primarily due to end market weakness.

The first nine months of 2024 included $17.3 million in incremental sales from recent acquisitions.

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

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

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Aerospace and Defense Electronics

Second Quarter Change Six Months Change

Third Quarter Change Nine Months Change

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

9 unchanged sentences

Operating income 28.1 % 26.9 % 28.5 % 27.6 %

Second quarter of 2024 compared with the second quarter of 2023

Third quarter of 2024 compared with the third quarter of 2023

Net sales increased due to a $12.6 million increase in defense electronics and a $4.3 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.

Cost of sales increased 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 $2.5 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.

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

Net sales increased due to a $19.4 million increase for defense electronics and an $18.4 million increase for aerospace electronics.

Cost of sales increased primarily due to higher net sales partially offset by favorable product mix, 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 $5.7 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.

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

Engineered Systems

Second Quarter Change Six Months Change

Third Quarter Change Nine Months Change

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

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Operating income 10.3 % 9.5 % 7.1 % 9.7 %

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 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.

Third quarter of 2024 compared with the third quarter of 2023

Net sales increased due to higher sales of $10.3 million for engineered products and $0.5 million for energy systems.

Cost of sales increased primarily due to higher net sales, and the cost of sales percentage increased slightly during the period.

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

Operating income and operating income as a percentage of net sales increased primarily due higher net sales and favorable program mix.

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

Net sales decreased primarily due to lower sales of $8.7 million for engineered products and $1.6 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.

The cost of sales percentage increased due to program mix.

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

Operating income decreased primarily due to lower net sales.

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Cash and Cash Equivalents

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

Cash and cash equivalents totaled $561.0 million at September 29, 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 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.

Total debt at September 29, 2024 was $2,798.0 million compared with $3,244.9 million at December 31, 2023.

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

At September 29, 2024, $1,171.1 million was available under the $1.20 billion credit facility, after reductions of $28.9 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.

At September 29, 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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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 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.

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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.

During the first nine months of 2024, we repurchased approximately 0.8 million shares for $332.6 million with a weighted-average price of $397.14 per share.

Subsequent to the end of the third quarter of 2024, we repurchased approximately 0.1 million shares for $21.4 million with a weighted-average price of $445.85 per share.

Net cash provided by operating activities was $859.5 million for the first nine months of 2024 compared with $671.7 million, driven primarily by stronger working capital conversion in the first nine months of 2024, including stronger account receivable collection and higher contract liabilities from customer advances.

Net cash used in investing activities was $178.2 million for the first nine months of 2024 compared with $127.3 million.

During the first nine months of 2024, we spent $123.7 million on acquisitions as compared with $53.5 million.

Capital expenditures for the first nine months of 2024 and 2023 were $54.7 million and $74.7 million, respectively.

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

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.

Net cash used in financing activities was $772.4 million for the first nine months of 2024 compared with net cash used in financing activities of $665.7 million, with the first nine months of 2024 including a $450 million debt maturity payment on the Senior Notes due April 2024, and share repurchases of $332.6 million.

During the first nine months of 2023, the Company repaid $125.0 million of amounts outstanding on its credit facility, the $300.0 million Fixed Rate Senior Notes due April 2023, and the remaining $245.0 million on its term loan due May 2026.

The Company also repurchased and retired $10.0 million of its Fixed Rate Senior Notes due April 2031, recording a $1.6 million non-cash gain on the extinguishment of this debt.

Critical Accounting Policies and Estimates

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disruptions in the global economy;

the ongoing conflict in Israel and neighboring regions, including related protests and the disruption to global shipping routes;

the ongoing conflict in Israel and neighboring regions, including related protests, attacks on defense contractors and suppliers and the disruption to global shipping routes;

the ongoing conflict between Russia and Ukraine, including the impact to energy prices and availability, especially in Europe;

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Weakness in the commercial aerospace industry negatively affects the markets of our commercial aviation businesses.

Ongoing issues with Boeing’s 737 MAX product line could result in manufacturing delays and lower sales of our products to Boeing.

The recent machinist strike at Boeing as well as the ongoing issues with Boeing’s 737 MAX product line could result in manufacturing delays and lower sales of our products to Boeing.

In addition, financial market fluctuations affect the value of the company’s pension assets.

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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