Executive Summary

Record first‑quarter sales and margins with a clean beat on EPS and a slight revenue beat: non‑GAAP EPS $4.95 vs S&P Global consensus $4.06*, revenue $1.450B vs $1.439B*; GAAP EPS $3.99. Management highlighted organic growth in all segments and record backlog as orders exceeded sales for the sixth straight quarter .
FY25 non‑GAAP EPS guidance maintained ($21.10–$21.50), while GAAP EPS was trimmed to $17.35–$17.83 (from $17.70–$18.20) amid tariff/macro uncertainty; Q2 non‑GAAP EPS guided to $4.95–$5.05, well above Q2 consensus $4.15* .
Defense and marine strength offset softness in X‑ray/dental and select short‑cycle test & measurement; A&D margins diluted near‑term by acquired Qioptiq/Micropac but expected to improve each quarter; leverage remains modest at 1.8x with robust free cash flow ($224.6M) .
Stock catalysts: tariff outcomes and pricing pass‑through, European defense budgets and U.S. program awards (Black Hornet, SDA tracking layer), and execution on integration/margin lift at Qioptiq/Micropac .

What Went Well and What Went Wrong

What Went Well
- “Record first quarter sales, non‑GAAP operating margin, and adjusted earnings per share” with organic growth in every segment; “orders exceeded sales for the sixth consecutive quarter,” driving an all‑time record quarter‑end backlog .
- Segment outperformance: A&D sales +30.6% (incl. acquisitions), Instrumentation margin +97 bps to 27.0% GAAP (+88 bps to 27.9% non‑GAAP), marine instruments strength on offshore energy/defense demand .
- Strong cash generation: CFO $242.6M, FCF $224.6M; leverage 1.8x; ample liquidity ($855.5M availability) to pursue M&A while maintaining guidance discipline .
What Went Wrong
- GAAP EPS guide trimmed on tariff/macro uncertainty; management assumed ~1% GDP headwind to derisk revenue (offset partly by Qioptiq) and cited potential supply‑chain tariff cost creep (mitigation underway) .
- Softness in specific end‑markets: lower X‑ray (dental) and some short‑cycle test & measurement; environmental instruments down 2% YoY in Q1 .
- Near‑term A&D margin dilution from acquisitions (Qioptiq), higher interest expense YoY ($17.3M vs $12.7M), and lower CFO YoY (timing of FX contracts, customer advances) .

Financial Results

Headline comps vs prior periods and S&P Global consensus

Metric	Q3 2024	Q4 2024	Q1 2025 (Reported)	Q1 2025 Consensus*	Surprise
Revenue ($M)	$1,443.5	$1,502.3	$1,449.9	$1,439.4*	+$10.5M ($1,449.9 vs $1,439.4*)
GAAP Diluted EPS	$5.54	$4.20	$3.99	n/a*	n/a
Non‑GAAP Diluted EPS	$5.10	$5.52	$4.95	$4.06*	+$0.89 ($4.95 vs $4.06*)
GAAP Operating Margin	18.8%	15.8%	17.9%	n/a*	n/a
Non‑GAAP Operating Margin	22.5%	22.7%	22.0%	n/a*	n/a

Note: S&P Global consensus values marked with *; Values retrieved from S&P Global.

Year‑over‑year (Q1)

Metric	Q1 2024	Q1 2025
Revenue ($M)	$1,350.1	$1,449.9
GAAP Diluted EPS	$3.72	$3.99
Non‑GAAP Diluted EPS	$4.55	$4.95
GAAP Operating Margin	17.4%	17.9%
Non‑GAAP Operating Margin	21.2%	22.0%

Segment performance (Q1)

Segment ($M)	Sales Q1’24	Sales Q1’25	YoY	Op Inc Q1’24	Op Inc Q1’25	YoY
Digital Imaging	$740.8	$757.0	2.2%	$113.8	$122.3	7.5%
Instrumentation	$330.4	$343.3	3.9%	$86.0	$92.7	7.8%
Aerospace & Defense Electronics	$185.7	$242.5	30.6%	$51.9	$55.7	7.3%
Engineered Systems	$93.2	$107.1	14.9%	$2.7	$10.8	300.0%

Cash flow and balance sheet KPIs

KPI	Q1 2024	Q1 2025
Cash from Operations ($M)	$291.0	$242.6
Free Cash Flow ($M)	$275.1	$224.6
Net Debt ($M)	$1,999.2 (Dec 29, 2024)	$2,503.3 (Mar 30, 2025)
Credit Facility Availability ($M)	$1,170.7 (Dec 29, 2024)	$855.5 (Mar 30, 2025)
Consolidated Leverage Ratio	1.5x (Dec 29, 2024)	1.8x (Mar 30, 2025)

Non‑GAAP reconciliation highlights (Q1 2025)

Adjustments: $52.0M acquired intangible amortization, $6.8M transaction/integration, $0.6M inventory step‑up; non‑GAAP EPS $4.95 and operating margin 22.0% .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
GAAP Diluted EPS	FY 2025	$17.70–$18.20 (1/22/25)	$17.35–$17.83 (4/23/25)	Lowered
Non‑GAAP Diluted EPS	FY 2025	$21.10–$21.50 (1/22/25)	$21.10–$21.50 (4/23/25)	Maintained
GAAP Diluted EPS	Q2 2025	n/a	$4.00–$4.15	New
Non‑GAAP Diluted EPS	Q2 2025	n/a	$4.95–$5.05	New

Management rationale: “Maintain our prior earnings outlook given the current very unpredictable environment,” with tariffs assumed to reduce 2025 sales by ~1% (largely in Digital Imaging and Instrumentation), partly offset by Qioptiq .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q‑2: Q3’24; Q‑1: Q4’24)	Current Period (Q1’25)	Trend
Tariffs & supply chain	Monitoring tariffs; shorter‑cycle stabilization; strong longer‑cycle defense/space/energy .	Assume ~1% GDP headwind to sales; potential $18M/quarter supply‑chain cost impact mitigated via exemptions, localization, pricing; P&L impact lagged via inventory turns .	Heightened risk; proactive mitigation
Defense demand	A&D growth Q3/Q4 on products and programs .	A&D sales +30.6% incl. acquisitions; EU rearmament tailwinds; U.S./Europe footprint advantage; record backlog (incl. Qioptiq) .	Strengthening
Space programs	Strong demand; business mix tailwind .	SDA tracking layer delivery milestones; heritage across 260+ missions .	Positive
Short‑cycle T&M, industrial imaging	Q3: recovery/stabilization; Q4: mixed .	Test & measurement broadly flat for 2025; continued sensor softness; industrial IR/dental X‑ray weakness .	Mixed/flat
China exposure	A watch item (macro/tariffs) .	China ~4% of total sales; <2% U.S. exports to China; distributors cautious amid elevated tariffs .	Managed exposure
M&A integration & margins	Micropac closed 12/30; Excelitas carve‑out pending as of Q4; leverage low .	Qioptiq closed 1/31; accretive (~$0.15 EPS), near‑term A&D margin dilution improving each quarter .	Accretive; margin build
Backlog/book‑to‑bill	Orders>sales Q3/Q4; record sales .	All‑time record backlog; overall B:B ~1.05x (DI 1.11, Instruments 1.04) .	Strong

Management Commentary

“We achieved record first quarter sales, non‑GAAP operating margin, and adjusted earnings per share…orders exceeded sales for the sixth consecutive quarter” (Executive Chairman) .
“We must assume that the market uncertainty will have some impact…assumed a negative sales impact of perhaps about 1%…offset by the Qioptiq acquisition” (Executive Chairman) .
“Instrumentation operating margin…27% GAAP…27.9% non‑GAAP” with marine up 9.5% on offshore energy and subsea defense; environmental down 2% (COO) .
“Every quarter going forward [Qioptiq] margins are going to improve…we expect Qioptiq to add another $0.15 to our overall earnings” (Executive Chairman) .
“We ended the quarter with a leverage ratio of just 1.8x…our pipeline is relatively healthy…we generate about $1 billion of cash a year” (Executive Chairman) .

Q&A Highlights

Tariffs: Management derisked FY revenue by ~1%; expects potential supply‑chain tariff costs up to ~$18M/quarter, mitigated via exemptions (USMCA/DoD), localization and pricing; P&L impact lagging through inventory turns (3–4x/year) .
China/region: China ~4% of sales (half from U.S. exports); avionics must ship regardless due to certification; T&M/cameras could be pressured; distributors cautious at elevated tariff levels .
Short‑cycle outlook: Test & measurement expected flat in 2025; industrial cameras/sensors lagging; Digital Imaging B:B 1.11x supports outlook .
A&D/Europe: EU defense budgets may rise to $800–$900B over 5 years; Teledyne expects at least proportional share given unique products and in‑region manufacturing (U.K., Sweden, Denmark, Iceland) .
Capital allocation: Prioritize M&A over buybacks; opportunistic repurchases only when valuation dislocated; fixed debt ~2.4% rates; leverage could decline to ~1.2x by year‑end absent further deals .

Estimates Context

Q1 2025 vs S&P Global consensus: revenue $1,449.9M vs $1,439.4M*, non‑GAAP EPS $4.95 vs $4.06*, EBITDA $346.0M* vs $342.3M* (all beats); GAAP EPS $3.99 (no consensus provided here) .
Q2 2025 guidance vs consensus: non‑GAAP EPS guide $4.95–$5.05 vs $4.15*; GAAP EPS $4.00–$4.15; implies above‑consensus non‑GAAP EPS and supportive revenue trajectory .
FY 2025: Non‑GAAP EPS guide $21.10–$21.50 vs consensus $18.08*; GAAP EPS guide $17.35–$17.83; management maintained non‑GAAP while trimming GAAP for macro/tariffs .

Note: S&P Global consensus/actual values marked with *; Values retrieved from S&P Global.

Key Takeaways for Investors

Quality beat with record Q1 profitability metrics and record backlog; demand breadth (defense, space, marine) offsets isolated short‑cycle softness .
Guidance prudence reflects tariff/macro derisking; importantly, non‑GAAP FY EPS held and Q2 EPS guided well above consensus, suggesting confident near‑term execution .
A&D momentum is durable and multi‑regional; recent wins (USCG ESS‑M, German Black Hornet, Saudi LVSS) and SDA deliveries underpin medium‑term growth .
Near‑term A&D margin dilution from Qioptiq should fade as integration benefits accrue; management targets ~60 bps full‑year margin improvement, consistent with the Q1 step‑up .
Cash generation and modest leverage create optionality: continue bolt‑ons/mid‑sized M&A without stressing balance sheet; buybacks remain opportunistic .
Watch list: tariff implementation pace (pricing vs cost timing), China demand volatility in industrial/T&M, and camera/sensor recovery cadence (particularly dental/X‑ray and IR industrial) .
Trading setup: upside skew if tariff pass‑through/pricing is effective and EU defense accelerates; downside if short‑cycle stalls longer or tariff cost absorption outpaces price realization (likely lag in Q3/Q4 per inventory turns) .

Supporting Detail

Additional operational color (Q1 2025)

Digital Imaging: strength in commercial IR components and surveillance; X‑ray down; +$8.9M acquisition contribution .
Instrumentation: marine +$14.0M (offshore energy/defense); enviro −$2.2M; +$4.4M acquisition contribution; margin uplift from mix and improved marine margins .
A&D: defense electronics +$57.1M (incl. +$42.3M from acquisitions); aerospace −$0.3M; non‑GAAP op income +20.7% .
Engineered Systems: large YoY op income increase on prior‑year unfavorable estimate changes not recurring and favorable mix .

Notable Q1 2025‑period press releases (context)

Completed Qioptiq acquisition (~$710M) and U.S. advanced electronics carve‑out from Excelitas; strategic fit in optics/defense .
USCG: up to $74.2M IDIQ for ESS‑M imaging systems for MH‑60/MH‑65 .
German Army: $15M Black Hornet 4 nano‑UAS order; continued European adoption .
Saudi Arabia: $7.8M LVSS mobile surveillance systems contract .
SDA: delivered 100th IR detector for Tracking Layer; deep space sensor heritage .
Product launches: e2v Lince5M NIR high‑speed sensor; DALSA Tetra line scan cameras .

Non‑GAAP and tax items

Q1 2025 adjustments to GAAP include: $52.0M amortization, $6.8M transaction/integration, $0.6M inventory step‑up; effective tax rate 21.0% (22.5% ex‑discretes) .

Backlog/book‑to‑bill

All‑time record backlog; Qioptiq added ~+$60M acquired backlog; total backlog about ~$4B with ~$450M from Qioptiq (management commentary) .

TELEDYNE TECHNOLOGIES INC (TDY)·Q1 2025 Earnings Summary