Teledyne Technologies Incorporated (TDY) Earnings Call Transcript & Summary

Hello, and welcome to the 2023 Annual Meeting of Stockholders of Teledyne Technologies, Inc. Please note that today's meeting is being recorded. [Operator Instructions] It is now my pleasure to turn today's meeting over to Robert Mehrabian, Chairman, President and Chief Executive Officer of Teledyne. Dr. Mehrabian, the floor is yours.

Thank you very much. Good morning, ladies and gentlemen. My name is Robert Mehrabian, and it is my pleasure to welcome you to this meeting. It's 9:15 a.m. and in accordance with the notice of the meeting, I call to order Teledyne Technologies Annual Meeting of Stockholders. This year, again, we're holding our annual meeting virtually. Stockholders participating may submit questions at any time in the space provided on the website used to access this meeting. This annual meeting is also being available to the public in a listen-only webcast mode. An agenda for the meeting has been posted on our virtual meeting site. All stockholders entitled to vote have the ability to do so online. If you are a stockholder entitled to vote and have not yet voted or if you want to change your previously cast vote, please do so via the website used to access the meeting. Please remember that if you have already voted by proxy, it is 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 Election. I will now make certain introductions. Let me first introduce our directors who are participating virtually. The directors who are candidates for reelection are: Kenneth C. Dahlberg, retired Chairman and CEO of Science Applications International Corporation; Michelle A. Kumbier, Senior Vice President and President, Turf & Consumer Products, Briggs & Stratton LLC; Robert A. Malone, Executive Chairman, President and CEO of First Sonora Bancshares, Inc. and retired Chairman and President of BP America, Incorporated. Teledyne's Directors whose terms are continuing, in addition to myself, are: Charles Crocker, Chairman and CEO, Crocker Capital and retired Chairman and CEO of BEI Technologies, Inc.; Simon M. Lorne, Vice Chairman and Chief Legal Officer of Millennium Management LLC and former General Counsel, U.S. Securities and Exchange Commission; Vincent J. Morales, Senior Vice President and Chief Financial Officer of PPG Industries, Inc.; Jane C. Sherburne, Principal of Sherburne PLLC and former Senior Executive Vice President, General Counsel and Corporate Secretary of the Bank of New York Mellon Corporation; Denise R. Singleton, Executive Vice President, General Counsel and Secretary of WestRock Company; Michael T. Smith, retired Chairman and CEO of Hughes Corporation and Teledyne's Lead Director; and Wesley W. von Schack, Chairman of AEGIS Insurance Services and former Chairman, President and CEO of Energy East Corporation. I would also like to introduce Susan L. Main, our Senior Vice President and Chief Financial Officer; and Melanie S. Cibik, our Senior Vice President, General Counsel, Chief Compliance Officer and Secretary to the Board. Also present today virtually are Jeff Plourde and Karen Ericson of Deloitte & Touche, the company's independent auditor. If questions arise during the discussion period that Jeff or Karen should appropriately address, they will be glad to respond. We're also being assisted virtually by representatives of Computershare. Bridget Huerta will serve as inspector of election. I will now move to the second agenda item. Ms. Cibik will report on the mailing of the meeting -- of the notice of this meeting and the presence of a quorum.

This meeting is held pursuant to notice dated and mailed or made available to stockholders on March 15, 2023, to each stockholder of record on March 1, 2023, who is entitled to vote. A list of stockholders entitled to vote at this meeting has been made available at the company's 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 93.51% of the outstanding voting stock of the company present in person or by proxy. This represents a quorum.

I hereby declare a quorum is present at the meeting. The first matter to be acted upon by the stockholders is the election of 3 Class III Directors to serve until the 2026 Annual Meeting as provided in the proxy statement. Melanie Cibik will now put in nomination the names of the slate of directors listed in the proxy statement.

I hereby nominate for election as directors of the company the following directors: Kenneth C. Dahlberg, retired Chairman and CEO of Science Applications International Corporation; Michelle A. Kumbier, Senior Vice President and President, Turf & Consumer Products, Briggs & Stratton, LLC; 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. No written notice was received by Teledyne that any other nominations would be made at this meeting pursuant to the nomination procedure provided for in the company's restated certificate of incorporation and bylaws. Therefore, I declare the nominations closed. The next matter being submitted to stockholders for action is the ratification of the appointment by the Audit Committee of our Board of Directors of Deloitte and Touche LLP as our independent registered public accounting firm. The Audit Committee was assigned the responsibility of appointing the auditors for 2023. This committee consists entirely of directors who are independent of corporate management. It has had direct access to both the outside auditors and internal auditors of Teledyne. 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 2023.

I second the motion.

Thank you. The next matter being submitted to stockholders for action is the advisory resolution on executive compensation, commonly referred to as say on pay. We're asking the 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. The final matter being submitted to stockholders for action is the determination on an advisory basis of the frequency of future votes on executive compensation. We're asking stockholders to vote on whether future advisory votes on executive compensation should occur every year, every 2 years or every 3 years. The Board has recommended a vote in favor of an annual vote on executive compensation. Therefore, I move that future votes on executive compensation be held on an annual basis.

I second the motion.

Thank you, Ms. Main. 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.

I will now make a few comments about our 2022 performance as first quarter of 2023 earnings. In 2022, Teledyne continued its long history of navigating difficult market environments and ultimately delivered record financial results. Record sales of about $5.459 billion, increased 18.3% compared to 2021. Furthermore, record full year GAAP diluted earnings per share of $16.53 and non-GAAP diluted earnings per share of $18.19 were also increased 64.5% and 7.9%, respectively. Full year 2022 GAAP and non-GAAP operating margins were also records. In 2022, Teledyne's technological world leadership was best demonstrated by our imaging sensor technologies. Teledyne infrared detectors are used in 3 of the 4 instruments of the James Webb Space Telescope known as JWST. Accounting all detectors account for about 90% of all imaging PIXIS in this telescope. The JWST was launched on December 25, 2021. And after commissioning the first images were released to the public in July 2022. To date, the JWST has imaged galaxies beyond the grasp of other telescopes and yielded unprecedented views of star formation and the early universe. This morning, we also began 2023 with record first quarter sales, operating margin, non-GAAP earnings and free cash flow. Overall, sales increased 4.7% with revenue and operating profit growing in every segment. Teledyne's success is best demonstrated by our financial performance over the years as reflected in our stock price. Since our spin-off into a newly publicly traded company on November 29, 1999, with a stock price of $8.81. As of last Friday's market close, our shareholders have been rewarded by a compounded annual return of 18% over the past 23-plus years. Given the strength of our balance sheet, balanced portfolio, I'm optimistic that Teledyne will successfully navigate through today's uncertain economic times and continue its successful path into the future. We will invest in our businesses to drive organic growth, be vigilant on costs and continue to acquire and integrate complementary businesses. Finally, I sincerely want to thank our employees for delivering our results, our Board of Directors for its guidance and our stockholders for their loyalty and support. This concludes my brief remarks. 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 over 75% of the shares present in person or by proxy at this meeting have voted for the election of each of the 3 Class III Director nominees named in the proxy statement. Over 96% 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 the fiscal year 2023. Over 94% of the shares present in person or by proxy at this meeting have voted in favor of approving the advisory vote on compensation. Finally, in regards to the proposal on the frequency of future advisory votes on executive compensation, the choice of 1 year has received the highest number of votes with over 98% of the votes.

I hereby declare that the nominees for directors have been duly elected. The appointment of Deloitte & Touche LLP to audit Teledyne's financial statement for our fiscal year 2023 has been duly ratified. The advisory resolution on executive compensation has been duly approved, and the choice of 1 year has received the highest number of votes on the proposal regarding the frequency of future works on executive compensation. We've now come to that part of the agenda, providing for general questions and discussion. If you are a shareholder 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 type your question. We will answer questions submitted after this meeting. Please include your e-mail address with your questions. As there is no other business, this concludes our meeting. Thank you for joining, and thank you for your support and interest in Teledyne. The meeting is now adjourned.

This concludes the meeting. You may now disconnect.