Teledyne Technologies Incorporated (TDY) Earnings Call Transcript & Summary

Hello, and welcome to the 2020 Teledyne Technologies Inc. Annual Meeting of Stockholders. Please note that today's meeting is being recorded. [Operator Instructions]. It is now my pleasure to turn today's meeting over to Dr. Robert Mehrabia, Teledyne's Executive Chairman. Dr. Mehrabian, the floor is yours.

Thank you very much. Good morning, ladies and gentlemen. My name is Robert Mehrabian, Executive Chairman of Teledyne Technologies, and it's my pleasure to welcome you to this meeting. It's 9 a.m. And in accordance with the notice of the meeting, I call to order Teledyne Technologies Annual Meeting of Stockholders. This year, we're holding our annual meeting virtually due to the potential health concerns caused by COVID-19. Stockholders participating virtually in this meeting may submit questions at any time during this meeting in the space provided on the website used to access the meeting. The annual meeting is also being made available to the public in a listen mode only -- in a webcast listen-only mode. An agenda for the meeting has been posted. And you will note that under Item 5 of the agenda, an opportunity exists for you to ask questions, which will be answered after the meeting. Let me now make certain introductions. Let me first introduce our Directors who are also participating virtually. The Directors who are candidates first for reelection are Roxanne Austin, President, Austin Investment Advisors and former President and COO of DIRECTV; Kenneth Dahlberg, retired Chairman and CEO of Science Applications International Corporation; and Robert Malone, Executive Chairman, President and CEO of First Sonora Bancshares and retired Chairman and President of BP America. Teledyne Directors whose terms are continuing, in addition to myself are, Denise Cade, Senior VP, General Counsel and Corporate Secretary of IDEX Corporation; Charles Crocker, Chairman and CEO of Crocker Capital and Retired Chairman and CEO of BEI Technologies; Simon Lorne, Vice Chairman and Chief Legal Officer of Millennium Management LLC and former General Counsel, U.S. Securities and Exchange Commission; Paul Miller, retired Chairman and CEO of Alliant Techsystems and retired Commander-in-Chief, U.S. Atlantic Command and NATO Supreme Allied Commander; Jane Sherburne, Principal of Sherburne PLLC and former Senior Executive Vice President, General Counsel and Corporate Secretary of the Bank of New York Mellon Corporation; Michael Smith, retired Chairman and CEO of Hughes Corporation and our lead Director; and Wes Von Schack, Chairman of AEGIS Insurance Services and former Chairman, President and CEO of Energy East Corporation. I'd like to introduce Teledyne's President and Chief Executive Officer, Aldo Pichelli; Susan Main, our Senior Vice President and Chief Financial Officer; and Melanie Cibik, Senior Vice President, General Counsel, Chief Compliant Officer and Secretary of Teledyne. Also present today is Jeff [ Pollard ] of Deloitte & Touche, the company's independent auditor. If questions arise during the discussion period that Jeff should appropriately address, he will be glad to respond. We are also being assisted today by representatives of Computershare. Mark Cano will serve as inspector of election. I will now move to the second agenda item. Melanie Cibik will report on the mailing of the notice of this meeting and the presence of a quorum.

This meeting is held pursuant to notice dated March 10, 2020, and mailed or made available to stockholders on or about March 13, 2020, to each stockholder of record on March 2, 2020, who is entitled to vote. A supplemental notice dated April 1, 2020, switching the format of the meeting to a virtual meeting was mailed on April 9, 2020, to each stockholder of record on March 2, 2020. A list of stockholders entitled to vote at this meeting has been made available at the company headquarters for the past 10 days and is available for examination by any stockholder desiring to do so on the website used to access this meeting. All documents concerning the call and notice of the meeting will be filed with the records of the meeting. The preliminary count of shares present immediately before the start of this meeting indicated 90.79% of the outstanding voting stock of the company present in person or by proxy. This represents a quorum.

Thank you, Melanie. I hereby declare a quorum is present at the meeting. Now we'll proceed to agenda Item #3. The first matter to be acted upon by the stockholders is the election of 3 Class III Directors to serve until the 2023 Annual Meeting as provided in the proxy statement. Melanie Cibik will now put into nomination the name of the slate of Directors listed in the proxy statement.

I hereby nominate for election as Directors of the company the following directors: Roxanne S. Austin, President, Austin Investment Advisors and former President and Chief Operating Officer of DIRECTV, Inc; Kenneth C. Dahlberg, retired Chairman and CEO of Science Applications International Corporation; and Robert A. Malone, Executive Chairman, President and CEO of First Sonora Bancshares, Inc. and retired Chairman and President of BP America Inc.

I second the motion.

Thank you, Ms. Main. No written notice was received by Teledyne that any other nomination would be made at this meeting pursuant to the nomination procedure provided in the company's restated certificate of incorporation and bylaws. Therefore, I declare the nominations closed. All stockholders entitled to vote at this meeting have the ability to do so online. If you're a stockholder entitled to vote and have not yet voted, or if you want to change previously cast vote, please do so via the website used to access this meeting. Please remember that if you have already voted by proxy, it's not necessary to vote again. After voting has been completed on all matters on the agenda, we will close the polls, and Ms. Cibik will present the preliminary report of the inspector of elections. The next matter being submitted to the stockholders for action is the ratification of the appointment by the Audit Committee of our Board of Directors of Deloitte & Touche LLP as our independent registered public accounting firm. The Audit Committee was assigned the responsibility of appointing the auditors for 2020. The committee consists entirely of Directors who are independent of corporate management. It has had direct access to both the outside auditors and the internal auditors. In its deliberations, the committee has worked regularly with Deloitte & Touche LLP and has had the opportunity to evaluate their work. I move for the ratification of the appointment of Deloitte & Touche LLP to audit the financial statements of the company and its subsidiaries for the year 2020.

I second the motion.

Thank you, again, Ms. Main. The final matter being submitted to the stockholders for action is the advisory resolution on executive compensation, commonly referred to as "say on pay". We're asking stockholders to approve the nonbinding advisory resolution on executive compensation as described and set forth in the proxy statement. The Board has recommended a vote in favor of this nonbinding resolution. Therefore, I move for the approval of this resolution.

I second the motion.

Thank you, Ms. Cibik. Ms. Cibik is there any other business that this forum should consider?

Management knows of no matters to be properly presented for consideration at this annual meeting other than those stated in the notice of the annual meeting and described in the proxy statement.

Thank you. If you would like to vote your shares, you may do so now by clicking on the link provided online. If you have previously voted by proxy, you do not need to vote again, unless you wish to change your vote. [Voting]

We will wait a couple of minutes for voting. In the meantime, I will read my quote from the first quarter 2020 earnings release, which we -- was issued earlier this morning. "Our first priority remains the health and safety of our employees and their families. Up to 40% of our total personnel continue to work from home. And within our manufacturing operations, we're maintaining social distancing and other necessary protocols. Given the challenging operating environment, we're especially pleased to report that Teledyne achieved both record first quarter sales and GAAP diluted earnings per share. Sales of $784.6 million increased 5.3% and included positive organic growth. Likewise, GAAP earnings per share and GAAP operating margin increased despite substantial charges taken in the first quarter. Teledyne's business portfolio remains exceptionally well balanced across end markets and geographies. In addition, approximately 1/2 of our businesses are longer cycle, more predictable and supported by record quarter-end backlog. Nevertheless, our current lower and wider earnings outlook is a result of the highly uncertain environment. Teledyne's balance sheet is exceptionally strong with over $230 million of cash and cash equivalents and more than $600 million available under our credit facility maturing in 2024. Given our ample liquidity and the resilience of our business portfolio, we continue to review and pursue acquisition opportunities." Voting has now been closed. We will now have a report from the Secretary, Melanie S. Cibik.

Mr. Chairman, the ballots have been counted, and between 93% and 97% of the shares present in person or by proxy at this meeting have been voted for the election of each of the 3 Class III Director nominees named in the proxy statement. Approximately 97% of the shares present in person or by proxy at this meeting have voted in favor of ratifying the appointment of Deloitte & Touche LLP as Teledyne's independent registered accounting firm to audit our financial statements for fiscal 2020. Finally, approximately 97% of the shares present in person or by proxy at this meeting have voted in favor of approving the advisory vote on executive compensation.

I hereby declare that the nominees for Director have been duly elected, the appointment of Deloitte & Touche LLP to audit Teledyne's financial statement for the fiscal year 2020 has been duly ratified and the advisory resolution on executive compensation has been duly approved. We have now come to that part of the agenda providing for general questions and discussions. This meeting is now open for questions. If you're a stockholder entitled to vote at this meeting, and wish to ask a question, you may submit a question by clicking on the message icon in the upper right corner of your screen and typing in your question. We will answer these questions after the meeting. As there are no other business -- as there is no other business, this concludes our meeting. Thank you for joining and for your support and interest in Teledyne. This meeting is now adjourned.

This concludes the meeting. You may now disconnect.