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S&P 500   5,123.41
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Israel hails 'success' in blocking Iran's unprecedented attack. Biden now seeks diplomatic response
Germany's Scholz arrives in China on a visit marked by trade tensions and Ukraine conflict
India's Modi vows to boost social spending, make country into a manufacturing hub ahead of election
Can homeless people be fined for sleeping outside? A rural Oregon city asks the US Supreme Court
The craze for Masters gnomes is growing. Little golf-centric statue is now a coveted collector item
Olympic track uniforms spark online debate about who designed them and why they're so skimpy
Momofuku backs down from defending its 'chile crunch' trademark after outcry by small businesses
S&P 500   5,123.41
DOW   37,983.24
QQQ   438.27
Israel hails 'success' in blocking Iran's unprecedented attack. Biden now seeks diplomatic response
Germany's Scholz arrives in China on a visit marked by trade tensions and Ukraine conflict
India's Modi vows to boost social spending, make country into a manufacturing hub ahead of election
Can homeless people be fined for sleeping outside? A rural Oregon city asks the US Supreme Court
The craze for Masters gnomes is growing. Little golf-centric statue is now a coveted collector item
Olympic track uniforms spark online debate about who designed them and why they're so skimpy
Momofuku backs down from defending its 'chile crunch' trademark after outcry by small businesses
S&P 500   5,123.41
DOW   37,983.24
QQQ   438.27
Israel hails 'success' in blocking Iran's unprecedented attack. Biden now seeks diplomatic response
Germany's Scholz arrives in China on a visit marked by trade tensions and Ukraine conflict
India's Modi vows to boost social spending, make country into a manufacturing hub ahead of election
Can homeless people be fined for sleeping outside? A rural Oregon city asks the US Supreme Court
The craze for Masters gnomes is growing. Little golf-centric statue is now a coveted collector item
Olympic track uniforms spark online debate about who designed them and why they're so skimpy
Momofuku backs down from defending its 'chile crunch' trademark after outcry by small businesses

Teledyne Technologies Q4 2022 Earnings Call Transcript


Listen to Conference Call View Latest SEC 10-K Filing

Participants

Corporate Executives

Analysts

Presentation

Operator

Ladies and gentlemen, good morning, thank you for standing by and welcome to the Teledyne Fourth Quarter Earnings Call. At this time, all lines are in listen-only mode. Later, there will be an opportunity for your questions and instructions will be given at that time. [Operator Instructions].

And as a reminder, today's conference is being recorded. At this time, it's my pleasure to turn the conference over to our host, Mr. Jason VanWees. Please go-ahead.

Jason VanWees
Vice Chairman at Teledyne Technologies

Thanks Tom and good morning everyone. This is Jason VanWees, Vice-Chairman of Teledyne and I'd like to welcome everyone to Teledyne's fourth-quarter and full-year 2022 earnings release conference call. We released our earnings earlier this morning before the market opened.

Joining me today are Teledyne's Chairman, President and CEO, Robert Mehrabian; Senior Vice President and CFO, Sue Main; Senior Vice-President, General Counsel, Chief Compliance Officer and Secretary, Melanie Cibik. Also joining today is Edwin Roks, EVP of Teledyne. After remarks by Robert and Sue we will ask for your questions. Of course, though before we get started, attorneys have reminded me to tell you that all forward-looking statements made this morning are subject to various risks, assumptions 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 one month.

Here is Robert.

Robert Mehrabian
Chairman, President and Chief Executive Officer at Teledyne Technologies

Thank you, Jason. Good morning and thank you for joining our earnings call. 2022 ended up being an excellent year. We concluded it with all time record quarterly and full-year sales and earnings per share. During 2022, Teledyne as with many other companies found itself faced with external forces beyond our control. These were inflation, strong dollar and parts shortages. Nevertheless with continued -- we continued our long history of navigating difficult market environments and we ultimately delivered earnings in excess of our own expectations.

Excluding foreign currency headwind, which negatively impacted fourth quarter sales growth by approximately 2.6%, growth in local currency would have been 5.7%. Excluding ETM acquisition, core growth in local currency, would have been approximately 5%. GAAP operating margin of 19.3% was an all-time record and non-GAAP operating margin of 22.4% increased 95 basis-points from last year. GAAP and non-GAAP earnings of $4.74 and $4.94, respectively were also records for Teledyne.

Fourth quarter free cash flow was reasonably healthy, but included interest payments of approximately $30 million which last year were made in the third quarter of 2021. While we completed the acquisition of ETM, our levered ratio continued to decline from 3.8 times in May of 2021 when we acquired cleared to 2.4 times at the end of 2022. Finally, our acquisition pipeline remains healthy, as evidenced by the recent addition of ChartWorld whose maritime navigation software and hardware tools breach a product and technology gap between our Teledyne Marine and Raymarine businesses.

Turning to our 2023 full-year outlook. While still very early in 2023 and with many unknowns, including projections of a recession, we're inclined to offer an initial revenue and earnings outlook in line with consensus expectations. On revenue, we see total 2023 sales growth of approximately 5%, including incremental sales from recent bolton acquisitions. For our backlog-driven long cycle businesses, we expect growth to be higher than average. For the majority of our short-cycle commercial businesses, foreign currency headwinds will impact the first quarter of 2023 where comparisons are tough and economic uncertainty and exports regulations remain fluid.

We continue to see overall growth, not contractual in these businesses, but expect that growth will be less than the total company average. On the other hand, supply chain constraints are improving albeit modestly. There are a few minor other known puts and takes, such as increased scope on our NASA contracts that Engineered Systems equally offset by the 2022 completion of our one web contract in the Aerospace and Electronics segments. But no other significant items to highlight this early in the year.

Our earnings outlook approximately 50 basis points of margin improvement in 2023 and we currently think instrumentation and digital imaging with the be above average contributors to this. While margins at Aerospace and Defense Electronics maybe flat or decline slightly given especially tough comps as a greater mix in 2023 of Defense Electronics, relative to commercial aerospace aftermarket sets.

I will now further comment on the performance of our four segments. In our digital Imaging segment, fourth quarter sales were relatively flat despite currency translation headwind of approximately 3.5%. Sales increased year-over-year for our industrial and scientific vision systems as well as our low-dose high resolution digital X-ray detectors. Sales of commercial infrared imaging cameras and components also increased and we're at record drivers since closing the FLIR acquisition in May of 2021.

While total FLIR related sales increased sequentially from the third quarter, sales of some surveillance and unmanned ground systems declined from last year on especially tough comparison. On the other hand, sales of unmanned air systems increased considerably year-over-year. GAAP segment upgrading margin was 18.8% and adjusted for intangible asset amortization only, segment margin was 23.8%, approximately 50 basis points greater then the fourth quarter of last year.

In our Instrumentation segment, overall, fourth-quarter sales increased 7.9% versus last year despite approximately 2.4% of FX translation headwind. Sales of electronic test and measurement systems, which include oscilloscopes, digitizers and protocol analyzers, increased 3.8% year-over-year despite a tough comparison with the fourth quarter of last year's. Sales of volatile oscilloscopes and protocol analyzers remained healthy. We continued strength in products for industry standards, such as Peripheral Component Interconnect Express or PCI Express and Universal Serial Bus or USB.

Sales of environmentally digital instruments increased 9% compared with last year with greater sales of both drug discovery and laboratory instruments, as well as air monitoring and process gas analyzers. Sales of marine instrumentation increased 9.8% in the quarter, primarily due to a strong marine defense sales and the ongoing recovery in offshore energy markets. Overall, instrumentation segment operating profit increased 18.4% in the fourth quarter with up -- GAAP operating margin increasing 215 basis points to 24.2% and 163 basis points on a non-GAAP basis, excluding intangible asset amortization, which brought the non-GAAP margins to 25.3%.

In Aerospace and Defense Electronics segment, fourth quarter sales increased 8.9%, driven by broad-based growth of both defense and commercial aerospace products. GAAP and non-GAAP segment operating profit increased approximately 30% with margins over 480 basis points greater than last year. In the Engineered Systems segment, fourth quarter revenue increased 6.7%, with operating profit declined given lower margins for some of our electronic manufacturing service product.

Before I turn the call over to Sue, I want to make a couple of concluding remarks. First, I was very pleased that Teledyne was able to overcome issues faced by most companies in 2022. Despite the macroeconomic and supply chain challenges noted earlier, our results exceeded the top end of our earnings outlook issued at any point during the year. While difficult to predict outcomes in 2023, we are reasonably confident that a number of our long cycle businesses serving defense, medical, energy and aerospace markets will grow.

While demand is more difficult to predict in our short-cycle instrumentation and imaging businesses, supply chain constraints and the previous -- premiums for grain market electronic components have begun to is modestly. Given the strength of our balanced business portfolio and our management's long history of navigating challenging markets, I am optimistic that Teledyne will continue on its successful path in 2023.

I will now turn the call over to Sue.

Sue Main
Senior Vice President and Chief Financial Officer at Teledyne Technologies

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 first-quarter and full-year 2023 outlook. In the fourth quarter, cash flow from operating activities was $237.7 million, compared with cash flow of $295.6 million for the same period of 2021. The fourth-quarter of 2022 reflected greater interest payments due to the timing of fixed rate bond interest and increased inventory purchases compared with the fourth-quarter of 2021.

Free cash flow that is cash from operating activities, less capital expenditures was $203.6 million in the fourth quarter of 2022 compared with $261.6 million in 2021. Capital expenditures were $34.1 million in the fourth quarter of 2022 compared with $34 million in 2021. Depreciation and amortization expense was $81.8 million for the fourth-quarter of 2022 compared with $86.2 million. In addition, noncash inventory step up expense for the fourth quarter of 2021 was $47.8 million, with no comparable amount recorded in the fourth quarter of 2022.

We ended the quarter with approximately $3.28 billion of net debt that is approximately $3.92 billion of debt less cash of $638.1 million. Our stock option compensation expense was $6.2 million in the fourth quarter of 2022 compared with $6.4 million in 2021. Turning to our outlook. Management currently believes that GAAP earnings per share in the first quarter of 2023 will be in the range of $3.57 to $3.69 per share with non-GAAP earnings in the range of $4.37 to $4.47. And for the full-year 2023, our GAAP earnings per share outlook is $15.80 to $16.10 and on a non-GAAP basis $19 to $19.20. The 2023 full-year estimated tax-rate excluding discrete items is expected to be 23%.

I will now pass the call to Robert.

Robert Mehrabian
Chairman, President and Chief Executive Officer at Teledyne Technologies

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

Questions and Answers

Operator

[Operator Instructions] We'll begin today with question from Greg Konrad representing Jefferies. Please go ahead.

Greg Konrad
Analyst at Jefferies Financial Group

Good morning.

Robert Mehrabian
Chairman, President and Chief Executive Officer at Teledyne Technologies

Good morning, Greg.

Greg Konrad
Analyst at Jefferies Financial Group

Good quarter and then maybe just to start, given your commentary around supply chain and long cycle outperforming in 2023, can you maybe just update us on your expectations for defense across the businesses. It seems like peers have called out some underperformance on supply chain this year, what are you seeing just in terms of the supply side and also in terms of demand?

Robert Mehrabian
Chairman, President and Chief Executive Officer at Teledyne Technologies

Frankly, we think defense while the growth was relatively modest in 2022 was 2% to 3%. That's our -- generally our US government businesses. We think in 2023 it be about 5% organic growth so we're relatively optimistic.

Greg Konrad
Analyst at Jefferies Financial Group

And then I was pleasantly surprised with just margins in the commentary. Some of them very outsized across the segments. Just in terms of your margin commentary for this year, what are some of the assumptions around price and inflation, FX and just looking at Q4 outperformance, anything unusual in that? Just when we think about the opportunities for 2023.

Robert Mehrabian
Chairman, President and Chief Executive Officer at Teledyne Technologies

Well, I think basically in 2022, we hit just about every cylinder at the end of the quarter, especially the last month and a half, and things turned out very favorably. On 2023, we think Q1 is going to be softer just like we had in 2022. Mostly, we have some headwinds from FX in first quarter. We think there'll be a decline in our revenue, maybe as much as 10%, but we don't know. It's too early. Maybe 1% headwind, maybe 1% of revenue decline. I would I would say, that. On the other hand, I think we will pick up in Q2, Q3, Q4, just like we did this year. Right now, early in the year in the first two weeks, we had some slower orders in some of our short-cycle businesses, but the last two weeks, they seem to be picking up. So overall, Greg, I'm optimistic about 2023 altogether.

Greg Konrad
Analyst at Jefferies Financial Group

And then maybe just sneaking one last one in. I mean how are you thinking about free cash flow in 2023, just given top line growth, margin expansion and any working capital needs? I mean, in the past, you talked about a target, how are you thinking about 2023 in terms of free cash flow?

Robert Mehrabian
Chairman, President and Chief Executive Officer at Teledyne Technologies

Yes. I think just pausing for a second because this would be asked, in 2022, we were a little short on cash. Well, a little $200 million, to be exact. And we think that's not going to happen in '23. We think our cash in '23 is going to be higher, approximately $900 million in cash, whereas in '22, we really have to be very careful. We looked a little more inventory than we wanted to, primarily because of the shortages. We fell about $30 million short-term revenue in the fourth quarter because of shortages. Also in '22, there was that lack of R&D -- which everybody has referred to. That costs us about $40 million. And we had about $60 million of more cash taxes, which brings us $400 [Phonetic] million. We don't think that's going to repeat itself in '23. So we're optimistic.

Greg Konrad
Analyst at Jefferies Financial Group

Thank you.

Operator

And next, we're going to go to the line of Elizabeth Grenfell, representing Bank of America. Your line is open.

Elizabeth Grenfell
Analyst at Bank of America Merrill Lynch

Hi, just a couple of questions. One, in the 5% revenue growth guidance. Can you break out what is price and what is volume in that?

Robert Mehrabian
Chairman, President and Chief Executive Officer at Teledyne Technologies

I think it's a little too early to do both. But I'll tell you, that's about 3.5% of organic growth and then 1.5% from our acquisitions that we made, including the most recent one that we announced. If you look at projections from GDP and inflation at the current time, I'm one of those people that doesn't really believe in these projections at this point. But the projections are that real GDP in the U.S. will only grow 1.4% in '23. And inflation will drop to about 2.7% overall developed markets probably GDP will grow 1.1%. That's where the projections are maybe a little higher in inflation. But Elizabeth, it's a little too early for me. I don't think the economies know either. So I'll just say that we expect to have an organic growth of 3.5% at this time. If things move like they did in '22, hopefully, we'll increase that. And of course, we'll make more acquisitions, too.

Elizabeth Grenfell
Analyst at Bank of America Merrill Lynch

Okay. And then can you give us a little more detail on your outlook by segment and where you see the most opportunity for upside?

Robert Mehrabian
Chairman, President and Chief Executive Officer at Teledyne Technologies

Sure. First, I think in the instrumentation, which includes marine, environmental and test and measurement, we expect growth to be about 5% or average of the company. Of course, that doesn't have acquisitions in it. In the Digital Imaging segment as a whole, we again expect a 5% growth, maybe 5.1%. Aerospace and defense, maybe 4% and Engineered Systems, maybe a little over 5%. Part of the reason for aerospace and defense being a little less than the average. Last year, we had that one web program that we ended successfully, which contributed about $20 million in revenue.

On the other hand, in Engineered Systems, we think we'll be a little above the average because we want that very successfully on the NASA -- contract, which adds about $20 million. So that's -- at this point, that's all I can say about that.

Elizabeth Grenfell
Analyst at Bank of America Merrill Lynch

Thank you very much.

Robert Mehrabian
Chairman, President and Chief Executive Officer at Teledyne Technologies

Sure, Elizabeth.

Operator

And we'll go to the line of Jim Ricchiuti with Needham & Company. Please go ahead.

James Ricchiuti
Analyst at Needham & Company LLC

Hi, thank you. So is it the short-cycle commercial business where if you looked at '23, Robert, where there might be some upside? Or are there some parts of the long-cycle business that could drive the upside versus the 5% that you're talking about for the company as a whole?

Robert Mehrabian
Chairman, President and Chief Executive Officer at Teledyne Technologies

Well, I think if I broke it down, the marine businesses have a little longer look at them. We think marine as a whole -- also because the energy -- offshore energy markets are improving and our projections for that are over 7%, maybe as much as 7.5% in marine. Then the short-cycle businesses, which is environmental and test and measurement. We think that would be about 3.5% together. We think that -- I've already talked about some of the others. In Digital Imaging, where we do -- did have a really good year and a really good fourth quarter with DALSA and e2v, we think we're going to be relatively flat organically, but we made some acquisitions, so that should give us about, with acquisitions, maybe 3.8%. We think FLIR would do better last -- next year, maybe a little over 5%, 6%. So -- and the -- it's a little between Defense and Aerospace. Defense is longer-cycle than Aerospace. If you discount the $20 million that we don't have in Web, we think Defense will grow some, Aerospace maybe flat, more short-cycle. And I've already talked about Engineered Systems and the MOSSI, which we won, which are longer-cycle businesses. We feel comfortable there.

James Ricchiuti
Analyst at Needham & Company LLC

So Robert, it sounds like you're relatively positive on constructive on what you're seeing out in the market. If I look at your commercial businesses, you alluded to some variability in bookings trends in some parts of the business. And maybe you can provide a little bit more color on that. But is there anything that you're seeing in the commercial areas, whether it's test and measurement or machine vision that might be consistent with a slowing economy?

Robert Mehrabian
Chairman, President and Chief Executive Officer at Teledyne Technologies

Yes, a little bit. I think you hit it on the head. Just as labor, I'd say in -- if you look at Marine, our book-to-bill in the fourth quarter was 1.15. That's why I said it's longer cycle, we feel good about it. We're just going to specifically what you said, environmental and test and measurement, while for the whole year, our book-to-bill is about one in -- in the fourth quarter, it dropped down to 0.96. To me, that's a sliver lower. So we are a little cautious about that. So asset DALSA e2v drop even further a little bit. And I think far would be okay, but some of our vision systems and scientific cameras. We just hit it out of the park in the fourth quarter, and we think we're a little cautious about predicting.

On the other side, I mean, just to cut to the chase, the other side is that it's very early. Everybody is predicting one thing or another. All we're doing is we're kind of hunker down and we're going to do what we always do. If we have to cut, we have cut and if we have to hire, we hire and we do what we have to do to make our numbers.

James Ricchiuti
Analyst at Needham & Company LLC

Was the book-to-bill -- last question, was the book-to-bill around 1 for the company as a whole?

Robert Mehrabian
Chairman, President and Chief Executive Officer at Teledyne Technologies

Yes, just under 1, about 0.96, 0.97, but that has engineered systems in it, which was 0.9%, but that's but it's very lumpy. For the year, Engineered System was 1.12, which is a long-cycle business. For the year, the company was closer to 1.

James Ricchiuti
Analyst at Needham & Company LLC

Got it. Thanks very much.

Robert Mehrabian
Chairman, President and Chief Executive Officer at Teledyne Technologies

For sure.

Operator

And our next question will come from the line of Joe Giordano with Cowen. Please go ahead.

Joseph Giordano
Analyst at Cowen and Company

Hey, guys. How are you?

Robert Mehrabian
Chairman, President and Chief Executive Officer at Teledyne Technologies

Good morning, Joe. Very well.

Joseph Giordano
Analyst at Cowen and Company

I've been hearing more people talk about risks, what may be in the second half of the year from prices actually going down just given some of the deflationary characteristics you're seeing in prices paid and things like that. Is that something that you're seeing? Like how do you think about price and your ability to continue to raise? Or is it more about supporting where they are now?

Robert Mehrabian
Chairman, President and Chief Executive Officer at Teledyne Technologies

Well, in 2022, we added -- Joe, we added about 4% in pricing. And then if you hold against that, what we ended up spending, we had wages go up 4.5% overall buying stuff about $2.5 billion of direct and indirect materials. That went up overall, about 6.7%. Of course, that's on the cost of goods sold. I'm only saying this because I want to put this in perspective. So we increased prices across the board, 4%. Our materials inflation was 3.7% negative, our wages were 1% negative to sales. So when you add those two sales, materials inflation was and share wage inflation was 4.7% negative. We increased prices 4%. So net-net, we suffered about 60 basis points of betterment between the two.

Now going forward, we expect to increase prices. How much -- it's difficult to predict because as you said, some people are talking about decreasing prices in the second half. But we have to increase prices somewhat because we're going to have more inflation that we inherited and we're going to have to -- we're giving our employees about 4% raises across the board. So to make up for that, we have to increase prices somewhat. It depends on how the market behaves itself, we're right now saying our overall margins are not improved 50 basis points versus last year. That's pretty good.

So we'll have less broker premiums. Last year, we paid $90 million excess fees to our brokers for parts. We think in 2023, that will maybe be half. So I mean it's a long answer to a short question. There's a lot of unknowns, but I feel we'll maintain our crisis and maybe increase on that level.

Joseph Giordano
Analyst at Cowen and Company

If I think about your -- the bottom end of your guide, I mean it's a pretty narrow guide, but if I think about the bottom end on that guide, how protected do you think you are if there is like what kind of recessionary outlook does that have? If we do -- some of these macro indicators are pretty bad. If we do go into a recession, do you feel like you have coverage there at the bottom end of the guide and like which businesses? Like do you -- are you anticipating declines at certain businesses at the bottom end?

Robert Mehrabian
Chairman, President and Chief Executive Officer at Teledyne Technologies

Well, the longer cycle businesses are less cyclical, which would be our government defense about 25% Medical Scientific energy, aerospace overall, which constitutes about 40% of our portfolio. I don't think those are going to be effective. On the flip side, the short-cycle businesses would constitute 60% of our overall portfolio. If the world macroeconomic really suffers, obviously, we're going to have to take some hits. As you said, we have a very narrow range that we came out with, primarily because we're not sure what's going to happen. We could have probably had a larger range, but coming out of 2020 as strongly as we did, we feel okay about that.

Joseph Giordano
Analyst at Cowen and Company

The last one for me. Have you internally started adding things like have you started to be a little bit more judicious on expenses and travel and things like that in anticipation of things weakening? Or is that you'll adjust as necessary?

Robert Mehrabian
Chairman, President and Chief Executive Officer at Teledyne Technologies

No, that's a mode of our operation. It's something we do day in and day out regardless of what the macroeconomics are. We control everything. We controlled expenses in travel, weaker, we eliminate square footage of our manufacturing facilities everything we do we're vigilant. And that's the only way we made it through '22 as well as we did. And we're going to continue that.

Joseph Giordano
Analyst at Cowen and Company

Thanks, guys.

Robert Mehrabian
Chairman, President and Chief Executive Officer at Teledyne Technologies

For sure.

Operator

[Operator Instructions] And we'll go to the line of Guy Hardwick representing Credit Suisse. Please go ahead.

Guy Hardwick
Analyst at Credit Suisse Group

Hi, good morning. So it's been about 20 months since Teledyne closed on FLIR. Can you give us a bit of insight as to how to combine the portfolios is progressing, whether there is any we've seen some revenue benefits from combining the two technology platforms. I mean in the past, you've done the same with DALSA and e2v. I'm just wondering if there's any comparable success stories or potential success stories to come from that?

Robert Mehrabian
Chairman, President and Chief Executive Officer at Teledyne Technologies

Guy. Good question. The answer is yes. We have some new products. We are -- we have some new markets, especially in machine vision and for example, also mapping or player has this Raymarine business. And we've had this geospatial business, where we do a lot of hydrographic mapping. And the most recent acquisition that we made, bridges the gap between those two. I don't know if we would have bought chart or if we didn't have FLIR, if we were just all geospatial. So those aren't really good. The other thing is that FLIR has really exceptional products in the unmanned area we call domain. And we have had historically good products at Teledyne legacy in the underwater domain, FLIR also brings now ground-based vehicles.

So now you look at the combination of the two companies. We have about $450 million or so of revenue in unmanned vehicles. unmanned air vehicle, unmanned ground vehicle and man under water vehicle -- and there's a lot of common technologies between those three in terms of control, because of software in terms of digitization and imaging. So those are some examples, guys after 20 months. But that will, of course, grow as a function of time.

Guy Hardwick
Analyst at Credit Suisse Group

Okay. And just a quick follow-up. I'm just trying to understand the FX guidance in your guidance because it looks like at current rates that FX actually could be a tailwind in the second half?

Robert Mehrabian
Chairman, President and Chief Executive Officer at Teledyne Technologies

It could be. As we think in the first half, certainly, first quarter, we think it's going to be 1% headwind versus the 2.1% to 2.5% last year. Having said that, I don't think anybody knows. I don't think the economies now, they might say, but they don't know. I don't think anybody knows what's going to happen. I certainly don't ever put it that way.

Guy Hardwick
Analyst at Credit Suisse Group

Okay. But can you just clarify what rates you perhaps what dollar euro rate you have currently?

Robert Mehrabian
Chairman, President and Chief Executive Officer at Teledyne Technologies

Well, currently, it's 1.09.

Guy Hardwick
Analyst at Credit Suisse Group

That's not what you're using in guidance, though, right?

Robert Mehrabian
Chairman, President and Chief Executive Officer at Teledyne Technologies

We're using about 1.06.

Guy Hardwick
Analyst at Credit Suisse Group

Okay. Thank you.

Operator

And there are no other questions queued up at this time.

Robert Mehrabian
Chairman, President and Chief Executive Officer at Teledyne Technologies

Thank you very much. Operator, I will now ask Jason to conclude our conference call.

Jason VanWees
Vice Chairman at Teledyne Technologies

Thanks, Tom, and thanks, everyone, for joining, of course, if you have follow-up questions. certainly feel free to call me or email me. My phone numbers on the earnings release. And Tom, if you could give the replay information on the call and conclude we'd appreciate it.

Operator

Absolutely. Thank you. Ladies and gentlemen, this conference will be available for replay starting at 10 a.m. Pacific and running through February 25 at midnight. You may access the AT&T playback service at any time by dialing 866-207-1041 and entering the access code of (347)-2355. International participants, you can dial 402-970-0847. Those numbers again are 866-207-1041. International participants please dial 402-970-0847 and enter the access code of 347-2355. And that does conclude our conference for today. We thank you for your participation and using the AT&T Event Services. You may now disconnect.

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