Teledyne raises 2026 earnings outlook as third-quarter sales reach record $1,684.9 million

Teledyne Technologies Incorporated (TDY) said in a filing that its third-quarter 2026 results set all-time records for quarterly sales and operating profit, and that it raised its full-year earnings outlook. The results, for the quarter ended Sept. 27, were released on Wednesday.

Here's how the company did:

• Net sales: $1,684.9 million vs. $1,539.5 million a year earlier, up 9.4%
• GAAP diluted earnings per share: $5.82 vs. $4.65 a year earlier, up 25.2%
• Non-GAAP diluted earnings per share: $6.72 vs. $5.57 a year earlier, up 20.6%
• Net income attributable to Teledyne: $272.8 million vs. $220.7 million a year earlier

Non-GAAP figures exclude acquisition-related items, mainly amortization of purchased technology and customer relationships.

Operating margin was 20.6%, compared with 18.4% a year earlier. Excluding those items, the non-GAAP operating margin was 23.9%, against 22.1%.

Cash provided by operating activities was $352.5 million, compared with $343.1 million a year earlier. Free cash flow, or cash from operations less capital expenditures, was $319.5 million, up from $313.9 million.

For the first nine months, net sales were $4,907.5 million, up 9.0% from $4,503.1 million. GAAP diluted earnings per share for the period were $16.02, compared with $13.06.

“Our third quarter sales and operating earnings were the strongest in Teledyne’s history,” said Executive Chairman Robert Mehrabian.

Mehrabian said orders have exceeded sales every quarter over the last three years, and that funded backlog is now nearly $5.3 billion.

Raised full-year outlook

The company raised its full-year 2026 GAAP diluted earnings per share outlook to $21.71 to $21.87, from $20.73 to $20.99. Its non-GAAP outlook rose to $25.40 to $25.50, from $24.45 to $24.65.

For the fourth quarter, the company expects GAAP diluted earnings per share of $5.68 to $5.83 and non-GAAP diluted earnings per share of $6.60 to $6.70. The non-GAAP outlook excludes certain transaction and integration costs and acquired intangible asset amortization.

Segment results

Digital Imaging net sales were $903.0 million, up 15.0% from $785.4 million a year earlier. Operating income rose 48.1% to $182.7 million from $123.4 million.

Higher sales of infrared imaging detectors, components and subsystems for defense and commercial applications drove the increase, the company said. The segment also included $5.5 million of incremental sales from a recent acquisition.

Instrumentation net sales were $370.5 million, up 1.9% from $363.6 million. Operating income was $99.6 million, up 0.8% from $98.8 million.

Environmental instrumentation sales rose $8.3 million, including $6.2 million from a recent acquisition, and marine instrumentation sales rose $3.4 million. Electronic test and measurement sales fell $4.8 million.

Aerospace and Defense Electronics net sales were $287.4 million, up 4.3% from $275.5 million. Operating income rose 10.5% to $77.8 million from $70.4 million.

The company said improved margins at recently acquired businesses contributed to the gain. Defense electronics sales rose $16.5 million, while aerospace electronics sales fell $4.6 million.

Engineered Systems net sales were $124.0 million, up 7.8% from $115.0 million. Operating income rose 6.6% to $13.0 million from $12.2 million, driven by higher net sales.

Corporate expense was $25.9 million, compared with $22.0 million a year earlier. The company said the increase primarily reflected higher professional services and compensation costs, including incentive compensation.

Pending Varex acquisition

Teledyne agreed on Aug. 10, 2026 to acquire Varex Imaging Corporation in a cash transaction valued at approximately $1.1 billion. The value considers Varex’s outstanding equity awards and net debt.

The company plans to fund the purchase from cash on hand and borrowings under its credit facility. The deal is expected to close in early 2027, subject to customary closing conditions, including regulatory approvals and approval by Varex’s stockholders.

After the close, Varex will be included in the Digital Imaging segment. A special meeting of Varex stockholders is scheduled for Oct. 28.

Before signing, Teledyne bought about 1.3 million Varex shares for $13.9 million. In the third quarter it recorded a $10.6 million gain in other income, net, from adjusting those shares to the market price at quarter-end.

Buybacks and debt

Teledyne repurchased $224.6 million of its stock in September and through Oct. 19, at a weighted average price of $607.03 per share, the company said. In the third quarter alone, it repurchased about 0.2 million shares for $94.8 million.

Net debt was $1,465.4 million as of Sept. 27, down from $2,123.0 million at Dec. 28, 2025. Total debt was $2,027.8 million, against cash and cash equivalents of $562.4 million, and the consolidated leverage ratio at quarter-end was 0.9x.

As of Sept. 27, $1,158.4 million was available under the $1.20 billion credit facility, after $41.6 million of outstanding letters of credit were deducted.