Teledyne Technologies Reports First Quarter Results
LOS ANGELES – April 24, 2002
– Teledyne Technologies Incorporated (NYSE:TDY)
·
Revenues of $183.3 million
·
Earnings per share of $0.16
·
Cash flow from operations of
$8.5 million
Teledyne Technologies
Incorporated (NYSE:TDY) today reported first quarter 2002 sales of $183.3
million, compared with sales of $189.7 million for the same period in
2001. Net income for the first quarter of
2002 was $5.1 million ($0.16 per diluted share), compared with net income of
$4.8 million ($0.15 per diluted share) in the first quarter of 2001.
“The benefits of the
multiple cost reduction efforts undertaken in 2001 are clearly reflected in the
improved financial performance of our company,” said Robert Mehrabian,
chairman, president and chief executive officer. “Excluding non-cash pension income, pre-tax income in the first
quarter of 2002 increased 44% compared with the first quarter of 2001. Furthermore, management of working capital
helped the company achieve positive cash flow from operations of $8.5 million
in the first quarter of 2002, compared with a cash usage of $25.9 million in
the first quarter of 2001. Given the
weak commercial economic environment, we are especially pleased with the
performance of our Electronics and Communications segment. Excluding non-cash pension income, operating
margin in this segment was at the highest level since the second quarter of
2000. We continue to believe that the
company is better positioned to achieve sustainable earnings growth when the
commercial markets that we serve rebound.”
Review of Operations
Electronics and Communications
The Electronics and
Communications segment’s first quarter 2002 sales were $90.5 million, compared
with first quarter 2001 sales of $91.8 million. First quarter 2002 operating profit was $8.3 million, compared
with operating profit of $6.2 million in the first quarter of 2001.
First quarter 2002 sales,
compared with the same period of 2001, reflected revenue growth in electronic
instruments, defense electronic products and military and medical
microelectronics. The revenue growth in
electronic instruments was partially driven by the acquisition of Advanced
Pollution Instrumentation in the fourth quarter of 2001. First quarter 2002 sales and operating
profit, compared with the same period of 2001, were negatively impacted by
reduced sales of relays used in semiconductor test equipment and communications
applications and a decrease in electronic manufacturing services, as well as
weakness in the commercial aviation market.
The significant improvement in operating profit, despite a $1.2 million
reduction in non-cash pension income, reflected reduced workforce and decreased
administrative expenses, as well as lower expenses in the company’s broadband
growth initiatives.
Systems Engineering Solutions
The Systems Engineering
Solutions segment’s first quarter 2002 sales were $46.9 million, compared with
first quarter 2001 sales of $55.2 million.
First quarter 2002 operating profit was $3.8 million, compared with
operating profit of $4.2 million in the first quarter of 2001.
First quarter 2002 sales,
compared with the same period of 2001, reflected flat revenue in core aerospace
and defense programs and were negatively impacted by reduced work for
environmental programs, primarily chemical weapons demilitarization. Operating profit reflected the mix and
timing of certain government programs and was negatively impacted by a $0.2
million reduction in non-cash pension income.
Aerospace Engines and Components
The Aerospace Engines and
Components segment’s first quarter 2002 sales were $41.9 million, compared with
first quarter 2001 sales of $38.8 million.
First quarter 2002 operating profit was $0.7 million, compared with
operating profit of $0.9 million in the first quarter of 2001.
First quarter 2002 sales,
compared with the same period of 2001, reflected revenue growth in OEM piston
engines and aftermarket products. Operating
profit in the piston engine business increased due to higher revenues but was
partially offset by higher aircraft liability reserves and crankshaft
litigation costs of $1.8 million. Sales
in the turbine engine business were negatively impacted by reduced development
phase work and no shipments of HARPOON cruise missile engines, partially offset
by higher revenues of spare parts for Air Force training aircraft. In addition, operating profit was negatively
impacted by a $0.3 million reduction in non-cash pension income.
Energy Systems
The Energy Systems segment’s
first quarter 2002 sales were $4.0 million, compared with first quarter 2001
sales of $3.9 million. The first
quarter 2002 operating loss was $0.3 million, compared with operating income of
$0.2 million in the first quarter of 2001.
First quarter 2002 sales
were consistent with the same period of 2001.
First quarter 2002 operating profit reflected additional research and
development expenditures for fuel cell programs. In addition, operating profit was lower due to a $0.1 million
reduction in non-cash pension income.
Additional Financial Information
First quarter 2002 earnings before
interest, taxes, depreciation and amortization (EBITDA) were $13.9 million,
compared with EBITDA of $13.6 million for the same period of 2001. Non-cash pension income for the first
quarter of 2002 was $0.6 million, compared with non-cash pension income of $2.4
million for the same period of 2001.
Depreciation and amortization expense for the first quarter of 2002 was
$5.1 million, compared to $5.4 million for the same period of 2001. First quarter and full year 2001
depreciation and amortization included goodwill amortization of $0.2 million
and $0.6 million, respectively. In
accordance with SFAS 142, goodwill is no longer subject to amortization in
2002. First quarter 2002 cash from
operating activities was $8.5 million, compared with a cash usage of $25.9
million for the same period in 2001.
Free cash flow (cash from operating activities less capital
expenditures) was $5.0 million for the first quarter of 2002, compared with a
cash usage $35.3 million for the same period of 2001. Capital expenditures for the first quarter of 2002 were $3.5
million, compared with $9.4 million for the first quarter of 2001. The first quarter of 2001 included $5.3
million of capital expenditures that were committed in 2000.
Outlook
Teledyne maintains a
balanced portfolio of approximately 45% government and 55% commercial
businesses. In its government and
defense businesses as a whole, the company expects modest revenue growth in
2002, primarily driven by demand for defense electronics products. Given the current state of the commercial
aviation market, Teledyne expects sales of avionics equipment to decline in
2002; however, the company expects revenue growth in its commercial
instrumentation businesses to offset the sales decline in avionics.
Orders and sales for several
of the company’s short cycle electronics product lines, which include relays
sold to the semiconductor and communications markets, increased slightly
compared to the fourth quarter of 2001.
Teledyne currently expects orders and revenues in these businesses to be
flat in the second quarter of 2002, relative to first quarter 2002. However, the company anticipates that orders
and revenues will improve slightly in the second half of 2002.
A weak economic environment
and temporary restrictions on general aviation airspace significantly impacted
the 2001 performance of the company’s Continental Motors aircraft piston engine
business. However, orders and sales of
aftermarket aviation products increased in the first quarter of 2002 relative
to the first and fourth quarters of 2001.
Nonetheless, given the current state of the economy, rising fuel costs, and
the company’s dependence on aftermarket aviation sales, the company expects
2002 sales for the Aerospace Engines and Components segment to be flat relative
to 2001. In addition, as Teledyne
continues to pursue the crankshaft litigation against its suppliers, with a
trial expected in the second quarter, the company expects to incur additional
legal expenses in 2002. Given the more
stable market outlook in its Aerospace Engines and Components segment, the
company is exploring strategic alternatives for the product lines in this
segment.
Full year 2001 earnings
included $9.5 million or $0.18 per share in non-cash pension income. The company currently expects approximately
$2.3 million or $0.04 per share of non-cash pension income in 2002. The reduction in non-cash pension income
reflected the completion of income associated with FAS 87 transition asset
amortization as well as the decline in the value of the company’s pension
assets during 2000 and 2001. The company
continues to anticipate approximately $10 million of additional cost savings in
2002 relative to 2001, which should offset the reduction in non-cash pension
income.
Based on its current outlook, the company estimates
that second quarter and full year 2002 earnings per share will be in the range
of approximately $0.15 to $0.18 and $0.66 to $0.78, respectively, including
approximately $0.04 per share of non-cash pension income for the full year
2002. Full year 2001 earnings per share
from continuing operations of $0.69 (excluding asset impairment, restructuring
and other charges) would have been $0.51 per share, excluding $0.18 per share
in non-cash pension income.
Forward-Looking
Statements Cautionary Notice
This press release contains forward-looking
statements, as defined in the Private Securities Litigation Reform Act of 1995,
relating to earnings, cost-savings, growth opportunities, capital expenditures
and strategic plans. Actual results
could differ materially from these forward-looking statements. Many factors, including changes in demand
for products sold to the semiconductor and communications markets, timely
development of acceptable and competitive fuel cell products and systems,
funding, continuation and award of government programs, the outcome of the
crankshaft litigation, and economic and political conditions, could change the
anticipated results.
The September 11 terrorist attacks and subsequent
events increase uncertainties associated with forward-looking statements about
the company’s business. For example,
flight restrictions negatively impact the market for general aviation aircraft
piston engine and components. In
addition, reduced shipments of commercial aviation aircraft, as well as the
liquidity of major airlines, could negatively affect the company’s Electronics and
Communications segment.
While Teledyne Technologies’ growth strategy
includes possible acquisitions, the company cannot provide any assurance as to
when, if or on what terms any acquisitions will be made. Acquisitions involve various inherent risks,
such as, among others, the company’s ability to integrate acquired businesses
and to achieve identified financial and operating synergies. Also, the company may not be able to sell or
exit timely or on acceptable terms its remaining non-core or under-performing
product lines, particularly given the current economic environment.
Additional information concerning factors that could
cause actual results to differ materially from those projected in the
forward-looking statements is contained in Teledyne Technologies’ periodic
filings with the Securities and Exchange Commission, including its 2001 Annual
Report on Form 10-K.
Teledyne Technologies is a leading provider of
sophisticated electronic components, instruments and communication products,
systems engineering solutions, aerospace engines and components and on-site gas
and power generation systems. Teledyne
Technologies has operations in the United States, the United Kingdom and
Mexico. For more information, visit
Teledyne Technologies’ website at www.teledyne.com.
A live webcast of Teledyne Technologies’ first
quarter earnings conference call will be
held at 10:00 a.m. (Eastern) on Wednesday, April 24. To access the call, go to www.companyboardroom.com or www.teledyne.com
approximately ten minutes before the scheduled start time. A replay will also be available for one
month at these same sites starting at 1:00 p.m. (Eastern) on Wednesday, April
24.
|
Investor Contact: Media Contact: |
Jason VanWees Robyn Choi (310) 893-1640 |
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