Teledyne Technologies (NYSE:TDY) executives told investors the company finished 2025 with record quarterly orders, sales, non-GAAP earnings, and operating margin, and said they are “reasonably confident” in their 2026 outlook as defense demand remained solid and several commercial markets continued to recover.
Vice Chairman Jason VanWees opened the company’s fourth-quarter earnings call alongside Executive Chairman Robert Mehrabian, President and CEO George Bobb, and CFO Steve Blackwood. Mehrabian said the results capped a year in which Teledyne’s longer-cycle businesses performed strongly while certain short-cycle markets showed improving trends.
Record quarter caps 2025 growth
In capital deployment, Mehrabian said 2025 was Teledyne’s second-largest year in history, with more than $850 million spent on acquisitions throughout the year and $400 million used for stock repurchases in the fourth quarter. He added that Teledyne generated about $1.1 billion in free cash flow for a second consecutive year and ended 2025 with a leverage ratio of 1.4x.
Mehrabian also highlighted a recent “String of Pearls” acquisition completed the prior week: DD Scientific, a UK-based manufacturer of high-performance electrochemical gas sensors. He said gas sensors are a critical component in Teledyne’s environmental instruments and represent an attractive consumables business with high recurring revenue.
Segment performance: defense strength and mixed commercial trends
CEO George Bobb detailed results across Teledyne’s four business segments.
- Digital Imaging: Fourth-quarter sales rose 3.4% despite a tough comparison, driven primarily by Teledyne FLIR. Bobb said infrared imaging components and subsystems—many used in customer unmanned systems—grew more than 20%, while FLIR surveillance products and complete unmanned air systems also increased. FLIR maritime sales were a record, supported in part by imaging systems for unmanned surface vessels and continued positioning toward industrial and defense markets. Industrial machine vision sensors and cameras increased year over year, but were offset by lower sales of X-ray detectors and scientific cameras. Segment non-GAAP operating margin rose 180 basis points to 24.7%, which Bobb said was a segment record since fully incorporating FLIR in 2021.
- Instrumentation: Fourth-quarter sales rose 3.7%. Marine instrument sales increased 3.3% on strong interconnect demand for offshore energy production and U.S. Virginia-class and Columbia-class submarines, alongside record sales of autonomous underwater vehicles, partially offset by reduced hydrography and oceanographic research sales. Environmental instrument sales increased 6.1% due to higher gas safety and ambient air and emissions monitoring demand and stabilization in laboratory and life sciences instruments. Electronic test and measurement sales rose 1.4% year over year and more than 10% sequentially from the third quarter. Fourth-quarter non-GAAP operating margin declined slightly on a tough comparison, but full-year 2025 margin increased 36 basis points to a record 28.4%.
- Aerospace and Defense Electronics: Fourth-quarter sales increased 40.4%, driven by the Qioptiq and Micropac acquisitions and organic growth in other defense electronics and commercial aerospace products. Non-GAAP margin declined year over year due to lower margins at recently acquired businesses.
- Engineered Systems: Revenue fell 9.9% due in part to delayed contract awards originally expected in the fourth quarter, though segment operating margin increased 259 basis points due to better performance on fixed-price contracts.
2026 outlook and growth expectations
Mehrabian said Teledyne expects 2026 revenue of approximately $6.37 billion and non-GAAP earnings per share at the midpoint of approximately $23.65, which he noted was consistent with current consensus estimates. He added that management expects normal seasonality, with about 48% of sales and 46% of earnings in the first half of 2026.
Blackwood provided more detailed guidance, saying Teledyne expects first-quarter 2026 GAAP EPS of $4.45 to $4.59 and non-GAAP EPS of $5.40 to $5.50. For full-year 2026, management expects GAAP EPS of $19.76 to $20.22 and non-GAAP EPS of $23.45 to $23.85.
During Q&A, Mehrabian said Teledyne expects most of its 2026 growth to be organic, estimating about 3.6% organic growth, while attributing roughly 4.2% to non-organic contributions. He said the company does not expect any short-cycle businesses to shrink on a full-year basis in 2026, contrasting with declines seen in prior years.
On digital imaging profitability, Mehrabian said a contingent liability reversal added about 50 basis points to fourth-quarter margins, netting against workforce reduction costs. He said full-year 2025 digital imaging margins were about 22.6% and management hopes margins increase by roughly 80 basis points in 2026 to around 23.4%, with an aim of reaching 24%.
Defense awards, unmanned systems, and orders
Management also discussed several defense-related wins and unmanned-system contributions. Bobb said Teledyne received its first production-rate contract in loitering munitions under the Marine Corps Organic Precision Fires-Light (OPFL) program. He also noted that on Dec. 19, the Space Development Agency awarded four prime contracts for 72 Tranche 3 Tracking Layer satellites, and Teledyne was selected to supply space-based infrared detectors to three of the four primes.
Asked to size the SDA opportunity, Bobb said the tracking layer program for Teledyne would be “north of $100 million” over the next few years, with contributions beginning in 2026 and extending across a two- to three-year period. Mehrabian added that these are expected to be fixed-price contracts and said performance typically improves over time.
Mehrabian said Teledyne’s combined unmanned businesses—air, ground, and underwater—generated about $500 million of revenue in 2025, and he later clarified the company expects that to grow about 10% in 2026, implying roughly $550 million. He also described Teledyne’s underwater vehicle offerings, including being the sole supplier of manned vehicles to Navy SEALs and selling a broad range of autonomous subsea systems for uses including infrastructure, anti-submarine warfare, and measurement missions, with program wins in the U.S. and Europe.
On orders, Mehrabian said fourth-quarter book-to-bill was about 1.07 overall and about 1.08 for the full year. By segment in the fourth quarter, he said instrumentation was about 1.0, digital imaging was about 1.06, aerospace and defense electronics was 1.25, and engineered systems was below 1.0 due to the segment’s lumpy ordering pattern.
Additional topics included test and measurement demand drivers—such as high-end oscilloscopes tied to automotive and data center power control and Ethernet traffic simulation products—and management’s view that memory price increases do not represent a significant net risk, noting memory suppliers are also customers of Teledyne’s test and measurement offerings. Management also said Teledyne’s commercial aviation exposure is relatively small, with the overall commercial aviation business about 5% of the company.
About Teledyne Technologies (NYSE:TDY)
Teledyne Technologies (NYSE: TDY), headquartered in Thousand Oaks, California, is a diversified industrial technology company that designs, manufactures and supports sophisticated electronic systems, instruments and imaging products. Founded in 1960 by Henry Singleton and George Kozmetsky, Teledyne has grown into a multinational provider of high-performance equipment and software for commercial, scientific and government customers. Its offerings are used in markets that include aerospace and defense, marine, industrial manufacturing, environmental monitoring and scientific research.
The company operates through businesses that develop precision instrumentation, digital imaging products, engineered systems and aerospace and defense electronics.
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