Teledyne Technologies Q3 2021 Earnings Call Transcript

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October 26, 2021

There are 10 speakers on the call.

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Teledyne Third Quarter Earnings Call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session. Instructions will be given at that time. And As a reminder, this call is being recorded.

Operator

I'd now like to turn the conference over to our host, Mr. Jason Van Weese. Please go ahead, sir.

Speaker 1

Thanks, Brad, and good morning, everyone. This is Jason Van Wees, Vice Chairman at Teledyne. And I'd like to welcome everyone to our Q3 earnings release conference call. And of course, we released our earnings earlier this morning before the market opened. Joining me today are Telenine's Chairman, President and CEO, Robert Mehrabian Senior Vice President and CFO, Sumin and Senior Vice President, General Counsel, Chief Compliance Officer and Secretary, Melanie Civek.

Speaker 1

After remarks by Robert and Sue, we will ask for your questions. However, before we get started, attorneys have reminded me to tell you that all forward looking statements made this All participants are subject to various assumptions, risks and caveats as noted in the earnings release and our periodic SEC filings and of course actual results may differ materially. In order to avoid potential selective disclosures, this call is simultaneously being webcast and a replay, both via webcast and dial in, will be available for approximately 1 month. Here is Robert.

Speaker 2

Thank you, Jason. Good morning and thank you for joining our earnings call. I'm very pleased with both our operational execution and our financial performance in the 3rd quarter. We achieved record revenue, 75.2% greater than last year, driven by organic growth of 11.9% and the remaining 63.3% of sales increase contributed by Teledyne Clear. Revenue increased organically in every major business group, but was especially strong in our Commercial Imaging and Electronic Test and Measurement Instrumentation businesses where organic growth for each was greater than 20% in the quarter.

Speaker 2

Furthermore, orders exceeded sales for the 4th consecutive quarter with a 3rd quarter book to bill of $1,100,000 GAAP earnings per share of $2.81 Increased 13.3% compared to last year and was $0.03 less than our record GAAP 3rd quarter earnings achieved in 2019. However, Excluding acquisition related charges, earnings were $4.34 per share in the 3rd quarter, an increase of 61.9% on a comparable basis from 2020. Cash flow was a 3rd quarter record, allowing repayment of $300,000,000 of debt, while our leverage ratio declined to 3.3 from 3.7 at the end of the second quarter. Teledyne FLIR performed strongly in its 1st full quarter. Integration efforts have been swift and we are increasingly excited about the long term future with Teledyne.

Speaker 2

We continue to accelerate the pace of planned synergies and currently expect to achieve our annualized Cost saving target of $80,000,000 before the middle of 2022. As opposed to the end of 2022, as we described in our July earnings call and compared with 2024 as noted when we announced the transaction in January of 2021. Regarding our execution in the quarter, Teledyne is not immune to supply chain issues, Inflation and other operational challenges. However, to date, we've been successfully navigating and managing these issues. And today, we're pleased to increase our full year sales, margin and Earnings outlook compares with the outlook we presented in July.

Speaker 2

On a full year basis, We now think a reasonable outlook for organic sales growth in 2021 Is approximately 7% to 7.5%, led by forecasted growth of almost 13% In digital imaging, which excludes Teledyne FLIR. This translates to total sales of $4,590,000,000 with contribution of $2,400,000,000 from Digital Imaging, including Clear. I will now further comment on the performance of the 4 business segments. In our Digital Imaging segment, 3rd quarter sales increased 217.3%, largely due to the FLIR acquisition, but organic growth in our combined commercial And Government Imaging Businesses was also very strong at 17.9%. Sales of Industrial and Scientific Vision Systems were a record and healthcare sales returned to pre pandemic levels.

Speaker 2

GAAP segment operating margin was 12.5%, but adjusted for transaction costs and purchase accounting segment margin was 23.9%. In our Instrumentation segment, overall quarter sales increased 9% versus last year. SELZOP test and electronic test and measurement systems, which include oscilloscopes and protocol analyzers We're exceptionally strong and increased 20.8% year over year to record levels. Sales of environmental instruments increased 7.6% from last year with sales related to human health and safety markets such as drug discovery and gas and flame detection being strongest in the quarter. Sales of marine instrumentation increased 3.2% in the quarter.

Speaker 2

In addition, orders were the strongest in the last 6 quarters with a quarter book to bill of 1.13. Overall, Instrumentation segment operating profit increased 24.3% With segment operating margin increasing 270 basis points or 2 47 basis Excluding intangible asset amortization. In the Aerospace and Defense Electronics segment, 3rd quarter sales increased 11.7%, driven by 8.4% growth in defense, Space and Industrial sales combined with a 27% increase in sales of commercial aerospace products versus last year's pandemic related tough quarter. GAAP operating profit Increased 34.5 percent with margin 375 basis points greater than last year. Finally, in the Engineered Systems segment, 3rd quarter revenue increased 1.4%, but operating profit and margin declined slightly since we exited the higher margin turbine engine business earlier this year.

Speaker 2

But before turning the call over to Sue, I want to comment on our margin and earnings outlook. For several years, we've been on a journey to move our overall operating margin From the low teens to over 20%. Over the last two and a half years, we've made tremendous progress Notwithstanding the pandemic and the recent supply chain and inflationary pressures. Today, the approximate $1 increase in our earnings outlook is primarily the result Further improvement in our full year 2021 forecasted operating margin, which excluding acquisition related charges is 100 basis points better at approximately 21% from our 20% forecast in July. And now to Sue.

Speaker 3

Thank you, Robert, and good morning, everyone. I will first discuss some additional financials for the quarter not covered by Robert, and then I will discuss our Q4 and full year 2021 outlook. In the Q3, cash flow from operating activities was $192,800,000 including all acquisition related costs. Excluding acquisition related cash costs, net of tax, cash from operations was $194,900,000 compared with cash flow of $150,300,000 for the same period of 2020. Free cash flow, that is cash from operating activities less capital expenditures, excluding acquisition related costs, was $165,700,000 in the Q3 of 2021 compared with $135,100,000 in 20 20.

Speaker 3

Capital expenditures were $29,200,000 in the 3rd quarter compared to $15,200,000 for the same period of 2020. Depreciation and amortization expense was $90,200,000 for the Q3 of 2021 compared to $29,200,000 in 2020. In addition, non cash inventory step up expense For the Q3 of 2021, it was $35,200,000 We ended the quarter with approximately 3 $89,000,000,000 of net debt, that is approximately $4,440,000,000 of debt, less cash of $551,800,000 Stock option compensation expense was $5,800,000 for the Q3 of 2021 compared to $5,700,000 for the same period of 2020. Resulting from the FLIR acquisition, restricted stock unit expense for FLIR employees was $1,800,000 in the Q3 of 2021. Turning to our outlook.

Speaker 3

Management currently believes that GAAP earnings per share in the Q4 of 2021 will be in the range of $2.53 to $2.69 per share with non GAAP earnings in the range of 4 point $0.07 to $4.17 And for the full year 2021, our GAAP earnings per share outlook is $9.13 to $9.29 and on a non GAAP basis, dollars 16.35 to $16.45 compared with our prior outlook of $15.25 to $15.50 The 2021 full year estimated tax rate, excluding discrete items, is expected to be 23.9%. In addition, we currently expect less discrete tax items in 2021 compared with 2020. I'll now pass the call back to Robert.

Speaker 2

Thank you, Sue. We would now like to take your questions. Operator, Brad, if you're ready to proceed with the question and answers, please go ahead.

Operator

And we can go right now to Greg Konrad with Jefferies. Please go ahead.

Speaker 4

Good morning and great quarter.

Speaker 2

Thank you, Brad.

Speaker 4

Maybe just to start, I mean, you talked about a lot of The higher outlook based on the margin, at least on the beat, it seems pretty broad based across segments. I mean, how do you think about the drivers there and just sustainability given tailwinds or potential headwinds? And I think previously you've always had a target of how much margin expansion you'd like to capture per year. I mean, has Anything changed around that as margins have reset higher?

Speaker 2

Well, I think, Greg, our expectation is that Our margins will keep increasing as we projected. We think it's still 50, maybe 60 basis points per year above where we are. And I say that Perhaps earlier, I may have said 100 basis points, but our margins have moved up to 21% On Q3, so it's going to get a little tougher, but we intend to improve margins as we go along.

Speaker 4

And then just, I mean, you mentioned accelerating the FLIR synergies the middle of next year. I mean, What allowed you to pull that forward? And maybe what does that mean for the longer term potential Drive productivity and take cost out of the business.

Speaker 2

I think in addition to wages, which Our significant about net benefits, about $45,000,000 The more important thing that we've been able to manage to do is reduce dependence on 3rd party consultants, Legal savings and frankly, lobbies. As you know, Greg, we don't have lobbies at Teledyne. So of course, the Board fees and public relations and So on, those help. But 3rd party consultants and legal and lobbyists are the others, I'd say $28,000,000 $30,000,000

Speaker 4

And then just last one for me. I mean, you briefly mentioned inflation Before, I mean, how do you think about the offsets there? How much within the supply chain versus are there Specific areas of the business where maybe you have more flexibility around pricing, just trying to think about broader risk of price mix?

Speaker 2

So far, when we look at the PPI, inflations are pretty high. We're not experiencing as much as we anticipated in the price pressure to us from our suppliers. Having said that, some of our suppliers more recently have come out with 20%, 25% price increases. Good part of it is we have long term agreements with some of them, so those would moderate. As for ourselves, so far this year, We've been able to increase prices on the average about 2%.

Speaker 2

Well, that means in some businesses, We can't obviously increase prices because we have long term contracts, Greg. But in other businesses, We do have the ability to increase prices. So on the average, we've increased 2%. Our intention is to continue doing that And perhaps especially next year, we'll start early and see how much elasticity we have in our prices.

Speaker 5

Thank you.

Operator

Thank you, Chris. And next we

Speaker 2

can go to the

Operator

line of Mike McGrory with Wolfe Research. Please go ahead.

Speaker 6

Hey, good morning, everyone. Thank you for the time. So I'm just curious, Within your government business, are there any watch items like new starts or programs with significant ramps That you're keeping a closer eye on while the U. S. Is operating under this continuing resolution?

Speaker 2

Yes, Mike. I think First, let me start by saying our government businesses are about 26%, 27% of our total. The 2 opportunities that we are keeping an eye on are underwater vehicles And there is a medium underwater UUV Now the government is soliciting proposals on and we're bidding on that across Are the Engineered Systems and our Marine businesses together just like we do with gliders and other things. And then there's the large underwater vehicle that we expect to bid on. Some of the other In digital imaging, we have the wide field of view or what's called WFOB, Early morning satellite, that's an opportunity for us.

Speaker 2

Our next generation overhead persistent infrared, PORPEER Is there another one? And the downside, if there is a downside, is we have to rebid And our NASA program, what we call MOSI, which is the Mission Systems Program, later this Here, we've been on it yet, but the decision would be later. And there's always a risk when you're doing that. But overall, There's a whole range of new programs that are available to us even under the continuing resolution.

Speaker 6

Got it. And then to the point in your release about the recovery in the longer cycle business, Now that you have that, would you sort of be willing to talk about the early trends that you're seeing into next year within the business?

Speaker 2

Right now, I would say the Opportunities would be in our marine businesses, primarily because the oil prices, as you're Well aware, might have moved up significantly, and we had a book to bill of 1 0.13 this quarter. We also think that we will have more opportunities in Aerospace and Defense Businesses, especially on the aerospace side, as people start traveling more, we think that Marine may have an upside next year of maybe $25,000,000 and controls, which is our computers that On various aircraft that can have a similar number, 20 to 25, those are longer cycle businesses. And So far, they look all right. On the shorter cycle, which the other side of the instrument, We enjoyed a 9% increase overall and T and M, our test and measurement is doing well. And we hope that with our new products that we keep developing, they'll have some bump next year too.

Speaker 6

Got it. Thank you.

Speaker 2

Thank you, Ryan.

Operator

And next, we can go to the line of Elizabeth Grenfell with Bank of America. Please go ahead.

Speaker 7

Hi, good morning. As we think about the FLIR integration And the acceleration and the timeline to achieving the initial cost savings, where do you think we could potentially see Additional upside to I think before the top side had been to $100,000,000 I mean how much additional headwind is or how much additional headroom is there and to achieving additional cost synergies and savings.

Speaker 2

Elizabeth, let me start with I hope I didn't misquote myself. Our top side savings for which we moved forward from 2024 to 2022 It's $80,000,000 Having said that, There are other opportunities, but there would be more opportunities in Developing products between FLIR's offerings and Teledyne's offerings. And As we move the revenue up and keep our costs down, we think that will help improve our margins. But We haven't factored that in the revenue synergies yet, because right now, we're Still integrating. We've integrated some of the businesses very quickly like they make Mid range vision systems, we make high end vision systems and those we've coupled right away That's worked out really well.

Speaker 2

But we're still working on the rest of the stuff like in the marine marine and our marine businesses, There are opportunities between their Raymarine businesses and our Software businesses and underwater software businesses at Caros, we're working on all of those. As we do that, I think those would create more savings as we go forward.

Speaker 7

Okay. And then as you continue to delever, How are you considering or thinking about the M and A environment and additional opportunities to grow inorganically?

Speaker 2

Yes. Elizabeth, first on the delevering, We're not sitting at 3.3x net debt to EBITDA. We hope to take that down to about 2.7 by the end of 2022. That would be our marker. As we look at that, when you're kind of start getting confident that you're going to go there, You start looking at larger acquisition potentials because those things take a little time to get 8, 9 months.

Speaker 2

But in the interim, we will look at and we are looking at smaller acquisitions. As we did back in 2017, when we acquired the E2B, our debt to EBITDA ratio was pretty high. We very quickly delevered over the next 3 years, but in the interim, we also bought about $500,000,000 of smaller assets. So We'll do the shorter term. We'll do small acquisitions.

Speaker 2

In the longer term, we promised, I Promised the rating agencies that we won't do anything very big until we assure we can hit our targets.

Speaker 7

Okay. Thank you.

Speaker 2

Thank you, Allison.

Operator

And next, we can go to the line of Jim Ricchiuti with Needham and Company, please go ahead.

Speaker 2

Hi, good morning. Robert, question

Speaker 8

On the FLIR business, organic growth there looks like it was fairly modest. And I don't recall them having much of an EST contribution in last year's Q3. Is any of this either Portfolio realignment, their commercial business appears to be doing okay. I think the Machine Vision business probably was pretty healthy. Is it their government related business that was a little slower?

Speaker 2

Actually, Jim, if I may, Their EST business, which was out of their components, Which they make the sensors and the solutions businesses, the commercial solution businesses, was Generated about $40,000,000 in revenue last year in Q3, I'd say $35,000,000 to $40,000,000 And then Q3 last year, including that It was about $466,000,000 This year, Q3, the revenue is $474,000,000 So if you and with no EST revenue. So if you were to look at it apples to apples and take the 40 out of the 4.66, You're looking more like a 4.26%, 4.27% last year versus the 4.74%. This is a significant growth there. 2nd, we've had reasonably good growth In our defense segment, the flare defense segment of about 3.5% this year versus last year, primarily coming from the unmanned systems. So There's been growth in the commercial as well as in the defense businesses.

Speaker 2

If you We're to moderate things, if you were to subtract the ESP sales last year Q3.

Speaker 8

No, thanks for clarifying that. You're right. They did about $90,000,000 in Q2. And even though it was down to $40,000,000 Q3, That's still a fairly significant contribution. Thanks for pointing that out, Robert.

Speaker 8

On the test and measurement business, you guys have Performed really well there. And what I'm wondering is, structurally, is there anything changing in that Business in that market, is it market share gains? Is it the activity you're seeing in the protocol analyzer business? Are you gaining share, do you think in the scopes business?

Speaker 2

Yes, Jim, both. What, first of all, we're hitting on all cylinders on our protocol analyzer businesses. If you combine our protocol analyzer and oscilloscope sales, that was a record for us, all time record this quarter. We see very strong demand for our protocol analyzers like PCI Express as well as High definition multimedia video products. The other thing that we've been successful at As we've combined our oscilloscopes with our protocol analyzers, We've saved significant amount of time for engineers that are developing interfaces between products.

Speaker 2

And that's been a real winner for us. So it's a combination. Good market for oscilloscopes, Great market for protocol analyzers and an upside when you combine the 2 together with new products.

Speaker 8

Got it. And 2 quick final questions. And this next question may be difficult to answer, But you do seem to be navigating the component environment fairly well. But I'm wondering if you can say Whether there's been any identifiable disruption to revenues, in other words, revenues that you Yes. Perhaps would have been able to achieve in the quarter, but you just it's just challenging to get parts.

Speaker 2

Yes. Jim, that's a great question. Yes, I can answer that, because we track that one very closely. 1st, in the quarter, I'd say, we probably didn't enjoy about $40,000,000 of revenue that we could have because of shortages. Now, we were fortunate because the way our portfolio of Business is laid out as you're very familiar with.

Speaker 2

We can make some of that up in other places. We have a balanced portfolio and these shortages are not hitting everything we do. And by the way, those are not lost sales. They just moved to Q4. We expect to have a similar number in Q4.

Speaker 2

We're looking at Q1 of next year, I'd say similar issues. So it's kind of a shifting game, But we make it up by pulling in from other parts of our portfolio. Having said that, We have an extremely active program from the procurement side, where we have a Major initiative in procurement automation, but we also have procurement working with our Interestingly, with our suppliers in the Far East who provide us PCBAs, They have access to components that go to Intuitos PCBAs and they're helping us get some of the computer chips and other components that we need. And we also have some dedicated people in the Far East doing the same thing. So it's a combination.

Speaker 2

Take the $40,000,000 push it forward. Take $40,000,000 from next this current quarter, push it forward, Pulling some stuff where we can and kind of, as I said before, we're navigating it. I think so far we've done okay.

Speaker 8

Got it. And last question, Robert, you alluded to a fairly strong book to bill And Maureen, can you give us a sense of book to bill in the various segments, digital imaging and

Speaker 2

the A and D and Sure. Sure, Jim. Let me start with Marine, I gave that. In Environmental and Test and Measurement, it's 1.05 in Q3. Recall that we had in TNM, we had record sales in Q3.

Speaker 2

So 1.05 is pretty good. Digital Imaging, I'd say 1.12 and AD and E, which is our Defense and Aerospace Businesses, 1.06 Engineered Systems, 1.05 above, GMN overall that brings it to about 1.1.

Speaker 8

Got it. Thanks very much. Congratulations on the quarter.

Speaker 2

Thank you, Jim.

Operator

And we'll Move to the line of Andrew Buscaglia with Berenberg. Please go ahead.

Speaker 5

Good morning, guys. On that book to Bill comment, can you in digital imaging, can you indicate how bookings are for FLIR?

Speaker 2

There's modest, but they're in the 1.1 in the digital imaging side.

Speaker 5

Okay. Okay. So still above 1, though? Yes. Okay.

Speaker 5

Okay. And then Sorry, what was that?

Speaker 2

No, I said in the digital imaging side. The total Okay. Yes. Okay. And

Speaker 5

you talked fairly positively about government. Yes. You're still gaining your fair share of government awards potentially. Would FLIR help are there any related to FLIR that you could talk to? And then maybe not so much near term, but anything you see on the horizon in 2022, as that was always kind of a sore spot for them in terms of You're winning new awards that are meaningful.

Speaker 2

Yes. I got to tell you that We're holding our own there. Things have moved a little to the right, But we've gotten some nice orders, especially, for example, in the U. S. Border Patrol, where we deliver light vehicle surveillance systems.

Speaker 2

We have some DARPA program on that could lead to other activities in the personal protective biosystems. Overall, I think we're building our own there and I expect we do okay. But again, Andrew, what is to me, what's important is even if you look at our government businesses With FLIR, we have a balanced portfolio and unfortunately, They may have suffered a little bit because too focused a portfolio. We have a balanced portfolio between our engineered systems, The clear unmanned both ground and air systems and integrated systems. And then we have, of course, our defense Programs in our Aerospace and Defense.

Speaker 2

So we gained about 3.5% In those programs, in our government programs in Q3, that may sound modest when you look at The overall growth of 11.9 percent organic, but I'm happy with that. If we can keep that pace in this Times going forward, we should be

Speaker 5

okay. Okay. And maybe just lastly, You're seeing some of your longer cycle businesses pick up a bit. I know it's small, but can you just comment on what's going on with energy specifically, You're tied to energy exposure?

Speaker 2

Yes. I think the first is because of The oil prices, we expect that we get about a 3% increase From 2021 to 2022, In total sales from, let's say, dollars 150,000,000 up, maybe to $175,000,000 That's a little more than 3% as I think about it, but it's more like 2.1%. But having said that, Again, I'll fall back on what we've constructed our portfolio. We get 3% here, 4% there. We get defense.

Speaker 2

We get an ASG. We get our short cycle businesses and then of course, digital imaging, we're hitting on all cylinders there. We think we're going to be okay. So there's upside in energy, but I'm not counting on it to move the whole company. The whole company would move no because of all the pieces that we have put together that protect us by the way on the downside as you well know, Andrew.

Speaker 5

Yes. Okay. Thanks, Robert.

Speaker 2

Thank you. Do we have any other questions coming up?

Operator

Currently, we just have Joe's line is open and nobody is following Joe.

Speaker 2

Okay. Joe? Hey, guys. Can you hear me? Yes.

Speaker 9

Hey, good morning. So you kind of hinted at this already, but if If you were to kind of think about FLIR ex the EST, what do you think is like the true growth rate that you're exiting 2021 at into 2022? And is that Kind of a sustainable rate into 2022?

Speaker 2

Right now, if you subtract out the EST, which As I mentioned, we had more revenue this year. I think it would be in the mid single digits, Just like we think calendar should be.

Speaker 9

Yes. And then if you were

Speaker 5

to contemplate Yes, go ahead. Yes, go ahead.

Speaker 2

I'll just say this. When we started the year, Joe, when we started the year, we said our organic growth would be 5.5% to 6%. As we went to summer time in July, we said it'd be 6.6%. And then when we came today, I said it'd be between 7% and 7.25%. So I'm hoping and use the words hoping that When I say mid single digits, like 5%, that would be a good beginning for us next year.

Speaker 5

Yes, understood.

Speaker 9

If you're talking about getting to like an $80,000,000 run rate in savings by mid-twenty 2 for FLIR, What does that kind of imply for a margin there? I mean, if you want to talk EBITDA, whatever is easiest to talk about.

Speaker 2

Well, I think I mentioned earlier, we anticipate to improve our margins 50 basis points to 60 basis points Across the company year over year and whether it's non GAAP Our EBITDA by the way, our EBITDA now is about this quarter was 24.2%. I think That will help improve our non GAAP margins up. For FLIR today, it's about 24%, which is significantly higher than We've enjoyed historically. And for 2021, our overall margin, we expect The non GAAP margin, which excludes, of course, the intangibles and cost of associated with the On purchase accounting, if you go to 21% and if we can enjoy 50 basis points on top of that, Some of the contribution, serious contribution coming from FLIR, we'd be very happy with that. Again, bear with me on this, Joe.

Speaker 2

I'm giving you what I'm seeing in January happening throughout next year. As we get to January, nothing Terrible happens in the world. Hopefully, we'll do better, but right now, I'll stay with the 50 basis points.

Speaker 9

And then just one last question more high level. There's been talk stories recently about China with nuclear gliders and suborbital. And can you just talk about like what this means for Space based detection and sensing and where you guys are positioned there and how that market can develop further given like kind of new threats that we need to deal with?

Speaker 2

Yes. We have 2 examples that I can give you. One of them is in our Engineered Systems segment, we have a contract where we're developing a wind tunnel For vehicles that are Of the nature that you just mentioned. And that's very important because to Test hypersonic vehicles, you want to have a wind tunnel to be able to do that, a hot wind tunnel. We have a small program of $50,000,000 which we think will be followed by another bigger program that Specifically for hypersonic vehicles.

Speaker 2

And the other side, we do have sensors In the A and D segment of FLIR and DALSA especially, That I meant digital imaging in general, but we have sensors that are being developed and used Computer edge computers that are located on various vehicles for detection of high speed missiles. And if that market starts growing, then we do have a series of products. And then we have one that I cannot describe too much. We do have a very strong Program, I said multiple programs in our imaging businesses here in Thousand Oaks. That's the one that locates infrared and other sensors on satellites and Space vehicles, those are classified programs and we're enjoying some really good Opportunities, that's actually led to growth of our, imaging programs.

Speaker 9

Thanks guys.

Speaker 2

Thank you very much.

Operator

We do have a follow-up question. We'll go to the line of Mike McGrory with Wolfe Research. Please go ahead.

Speaker 6

Hey, thanks for getting me back on. Unless I missed it somewhere, Robert, would you be able to go around the horn on the change Growth rate at the segments that drove the change in guidance?

Speaker 2

Yes. Let me see. I can do that. So in July, we Anticipated that the growth rate in instruments would be about 6%, 6.2% and we expect that to continue. In digital imaging, In July, we anticipated about 11.8%.

Speaker 2

We're raising that to about 13. In our Aerospace and Defense segment in July, we anticipated 4.4% about And now we think it'd be closer to 6. Engineered systems, we expect it to shrink about 1.7% and it will 1.7%. When you add those up, Mike, in July, we anticipated that Our organic growth would be about 6.6%. If you add the numbers up that I just mentioned Around them up, it will be between 7% to 7.5%, let's say 7.25% Organic growth.

Speaker 2

And that's kind of going around the horn as you mentioned.

Speaker 6

Thank you.

Speaker 2

For sure. And

Operator

currently no further questions in queue.

Speaker 2

Thank you, Brad, I'll now ask Jason to conclude the conference call, please.

Speaker 1

Thanks, Robert. And again, If anyone has follow-up questions, my number is on the earnings release. Please feel free to call and e mail me. And Brad, if you'd give the replay information And conclude the call, we'd be appreciated. Thanks, everyone.

Operator

Certainly. Thank you. And ladies and gentlemen, the conference will be available for replay after 10 o'clock AM Pacific today and running through November 27 at midnight. You can access the AT and T replay system at any time by dialing 1-eight 66 207-1041 and entering the access code 7,478, 140. International parties may dial 402-970-0847.

Operator

Those numbers again are 1-866-two zero seven-ten forty one and International 402 9700-847 with the access code 7,478,140. That does conclude our call for today. Thanks for your participation and for using AT and T Teleconference. You may now disconnect.

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Teledyne Technologies Q3 2021
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