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Teledyne Technologies Incorporated commented today on preliminary results for the first quarter of 2020.
No company is immune to global economic challenges. However, Teledyne’s business portfolio is exceptionally well-balanced across end markets and geographies, and includes a high degree of businesses serving critical infrastructure sectors such as the defense industrial base, water and wastewater, and healthcare and public health.
“Our first priority is the health and safety of our employees and their families,” said Robert Mehrabian, Executive Chairman. “Employees whose tasks can be done offsite have been instructed to work from home. Over the last few weeks, over one-third of Teledyne’s employees have been working remotely. Nevertheless, our senior management and all of our manufacturing sites remain operating given the critical Teledyne products supplied to our customers. For the safety of our workforce, we continue social distancing, enhanced cleaning protocols and usage of personal protective equipment, where appropriate.”
Notwithstanding unprecedented turmoil in the global economy and capital markets, Teledyne’s management expects to achieve record first quarter sales and GAAP earnings per diluted share. Sales are expected to increase over 5%, including positive organic growth, to approximately $785 million. In addition, including certain restructuring and other pretax charges totaling $9.4 million, but excluding one potential non-recurring charge discussed below, Teledyne’s management expects first quarter GAAP earnings per diluted share to increase to $2.10 to $2.15, compared with $2.02 in the first quarter of 2019. Orders also exceeded sales in each month of the first quarter, resulting in record backlog of approximately $1.8 billion.
However, given likely reductions in customer capital expenditures, we currently expect a substantial change in demand in the second quarter for some of Teledyne’s commercial businesses, especially those serving North America and Europe-based customers. While still assessing its outlook for the balance of 2020, Teledyne has begun a number of cost reduction actions and will provide additional commentary at the company’s regularly scheduled earnings release on the morning of April 22, 2020. Due to the current environment, Teledyne’s full year earnings outlook will decrease from the prior outlook issued January 22, 2020.
Teledyne’s balance sheet remains exceptionally strong, with a leverage ratio of 1.4x, approximately $230 million of cash and cash equivalents and over $600 million available under our credit facility maturing in 2024.
Teledyne is considering a pretax charge of approximately $40 million related to certain accounts receivable and inventory as a result of the bankruptcy of OneWeb Global Limited and affiliates (OneWeb). Teledyne’s customer, Airbus OneWeb Satellites, LLC (AOS), a joint venture of OneWeb and Airbus Defense and Space, has not declared bankruptcy. However, Teledyne may establish a reserve for accounts receivable and inventory, as well as accrue for other additional AOS-related expenses.
Separately, on Friday, April 3, Teledyne issued a statement via Form 8-K that it has been in advanced discussions to acquire Photonis International SAS and affiliates for approximately $550 million.