Teledyne Technologies (NYSE:TDY) reported a slight dip in first-quarter earnings and revenue, missing analyst estimates, and cut its full-year outlook, sending shares down 6.4%. The company posted adjusted earnings per share (EPS) of $4.55, falling short of the expected $4.63. Revenue also declined to $1.35 billion from last year's $1.38 billion, below the consensus estimate of $1.4 billion.
Despite the revenue decrease of 2.4% from the previous year, Teledyne achieved record first-quarter non-GAAP operating margin and free cash flow. Executive Chairman Robert Mehrabian attributed the strong cash flow and operating margin to organic growth and margin improvement in certain segments, despite the sales impact from weaker industrial automation and test and measurement markets.
For the full year 2024, Teledyne revised its non-GAAP EPS guidance to $19.25-$19.45, a decrease from the prior range of $20.35 to $20.68, and below the consensus of $20.56. The outlook for the second quarter of 2024 is set for non-GAAP diluted EPS between $4.40 and $4.50.
The company's stock movement reflects investor concerns over the reduced guidance, overshadowing the announcement of a pending acquisition of Adimec Holdings B.V. and the completion of Valeport acquisition on April 10, 2024. Teledyne's balance sheet strengthened with a consolidated leverage ratio of 1.7x and a significant debt reduction following a $450 million debt maturity payment made after the quarter ended.
Mehrabian commented on the revised outlook, "While overall orders remained strong, sales were impacted by deterioration in some of our shorter cycle imaging and instrumentation markets... we now forecast full year sales in those product families to decline meaningfully in 2024." He remains optimistic that declines will be offset by other business segments, maintaining flat sales year over year and stable operating margins.
Segment-wise, the Digital Imaging segment saw a 4.1% decrease in sales, while the Instrumentation segment experienced a marginal 0.9% decline. On the positive side, the Aerospace and Defense Electronics segment reported a 7.2% increase in sales, and the Engineered Systems segment faced a 10.5% decrease in sales.