Teledyne Technologies Incorporated
TDY · NYSE
Next quarter
Expected to report Jan 20, 2027 — estimated from last year’s reporting date.
Consensus is $6.77 EPS for Dec 2026 across 2 estimates, ranging $6.70 to $6.84.
TDY Sep 2026
- 9.27%
- $6.15
- $6.72
- —
- $1.68B
Reported results
- $1.68B
- 43.88%
- $347.20M
- 20.61%
- $272.80M
- $5.82
Highlights
- Record quarter: Sales of $1.685 billion rose 9.4% year over year, while operating income increased 22.8% to $347.2 million; both were quarterly records.
- Adjusted EPS beat: Non-GAAP diluted EPS of $6.72 was up 20.6% year over year and 9.3% above the $6.15 consensus. GAAP diluted EPS was $5.82, up 25.2%.
- Digital Imaging accelerated: Segment sales rose 15.0% to $903.0 million, including 14.3% organic growth, and non-GAAP operating income increased 34.9% to $229.6 million.
- Guidance raised again: Full-year 2026 non-GAAP EPS guidance is now $25.40–$25.50, up from $24.45–$24.65; GAAP EPS guidance is $21.71–$21.87, versus $20.73–$20.99.
- Backlog supports visibility: Management cited $5.3 billion of funded backlog, with about 72% expected to convert to revenue in the next 12 months; orders have exceeded sales for 12 consecutive quarters.
- Growth extended across segments: Aerospace and Defense Electronics sales rose 4.3%, Engineered Systems 7.8%, and Instrumentation 1.9%; the latter was held back by a 6.3% decline in test-and-measurement sales.
- Varex deal pending: Teledyne agreed to acquire Varex Imaging for about $1.1 billion in cash, with closing expected in early 2027, subject to approvals.
- Cash and capital returns: Operating cash flow was $352.5 million and free cash flow $319.5 million. Net debt was $1.465 billion, and buybacks in September and through October 19 totaled $224.6 million.
Analysis
Teledyne delivered a record third quarter, with $1.685 billion of sales and $347.2 million of operating income, up 9.4% and 22.8% year over year. Non-GAAP EPS of $6.72 exceeded the $6.15 consensus by 9.3%; GAAP EPS was $5.82, 25.2% above the year-ago quarter. Against the supplied prior-quarter figures, revenue increased from $1.66 billion and GAAP EPS from $5.37. Operating margin expanded to 20.6% from 18.4% a year earlier, while adjusted margin rose to 23.9% from 22.1%.
The defining driver was Digital Imaging: sales grew 15.0%, with 14.3% organic growth, and adjusted operating income climbed 34.9% on favorable mix and stronger infrared, space, unmanned and commercial imaging demand. Growth was broad beyond that segment, though Instrumentation’s sales advanced only 1.9% and operating income was nearly flat. Management raised full-year EPS guidance for the third consecutive quarter, to $25.40–$25.50 non-GAAP and $21.71–$21.87 GAAP, and pointed to $5.3 billion of funded backlog, with roughly 72% due to convert within 12 months. The pending $1.1 billion Varex acquisition and strong cash generation—$319.5 million of quarterly free cash flow—round out the print.
Record results and outlook
- Sales and earnings: Revenue was $1,684.9 million, up 9.4% year over year from $1,539.5 million. Operating income rose 22.8% to $347.2 million; net income attributable to Teledyne increased 23.6% to $272.8 million.
- Margins and EPS: GAAP operating margin improved 220 basis points to 20.6%. Excluding acquired-intangible amortization and other specified acquisition-related items, operating margin was 23.9%, versus 22.1%. Non-GAAP EPS was $6.72, compared with $5.57 a year ago; GAAP EPS was $5.82 versus $4.65.
- Raised 2026 guidance: Non-GAAP EPS is projected at $25.40–$25.50, compared with the prior $24.45–$24.65 range; GAAP EPS is projected at $21.71–$21.87, versus $20.73–$20.99. Fourth-quarter guidance is $6.60–$6.70 non-GAAP and $5.68–$5.83 GAAP.
- Sequential context: Relative to the supplied prior-quarter results, revenue rose from $1.66 billion to $1.685 billion and GAAP diluted EPS from $5.37 to $5.82.
Digital Imaging growth
Digital Imaging was the standout contributor, with segment sales rising 15.0% to $903.0 million and organic growth of 14.3%. Adjusted operating income increased 34.9% to $229.6 million, lifting the segment’s non-GAAP operating margin to 25.4%, up 376 basis points year over year. Favorable product mix and operating leverage drove the earnings growth. Infrared detectors, components and subsystems grew across defense and commercial uses, with particular strength in space and unmanned applications; management said space-based infrared detector sales increased more than 25%. Industrial and scientific vision, healthcare X-ray, commercial thermography and maritime products also grew. Recent acquisitions contributed $5.5 million of segment sales, so most of the increase was organic.
Backlog and other segments
- Visibility: Management cited funded backlog of about $5.3 billion, with 72% expected to be recognized over the next 12 months. The filing reported $5.514 billion of remaining performance obligations. Orders have exceeded sales for 12 consecutive quarters; total-company book-to-bill was 1.07x.
- Instrumentation: Sales increased 1.9% to $370.5 million, while operating income edged up 0.8% to $99.6 million. Environmental sales benefited from gas-monitoring demand and $6.2 million of acquisition contribution; marine sales grew, but test-and-measurement sales fell $4.8 million, or 6.3%. That product line’s bookings rose 18%, with a record 1.23x book-to-bill.
- Aerospace and Defense Electronics: Sales grew 4.3% to $287.4 million and operating income increased 10.5% to $77.8 million. Defense electronics sales rose $16.5 million, partly offset by a $4.6 million decline in aerospace electronics; book-to-bill was 1.29x.
- Engineered Systems: Sales increased 7.8% to $124.0 million and operating income rose 6.6% to $13.0 million, primarily on higher engineered-products sales.
Varex acquisition
The proposed cash acquisition of Varex Imaging is valued at approximately $1.1 billion, including its outstanding equity awards and net debt, and is expected to close in early 2027 subject to regulatory and shareholder approvals. Teledyne expects to fund it with cash and available credit-facility borrowings; Varex would join Digital Imaging. Management emphasized the complementary medical-imaging technologies, including Varex’s detectors for high-energy oncology X-ray applications and photon-counting technology. It sees scope to improve margins through its operating practices and integrate the commercial approach, while cautioning that initial portfolio rationalization could reduce Varex revenue before the business returns to targeted mid-single-digit growth.
Cash and capital allocation
- Cash generation: Operating cash flow was $352.5 million, compared with $343.1 million a year earlier; free cash flow reached a third-quarter record of $319.5 million versus $313.9 million. Higher inventory purchases partly offset stronger operating results.
- Balance sheet: Net debt was $1.465 billion at quarter-end, down from $2.123 billion at year-end 2025. Cash was $562.4 million and total debt $2.028 billion; $1.158 billion remained available under the credit facility.
- Repurchases: Teledyne repurchased about 0.2 million shares for $94.8 million during the quarter. Including purchases through October 19, repurchases totaled $224.6 million at a weighted-average price of $607.03 per share.
