Teledyne Technologies Inc (TDY) 2024 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to Teledyne's second-quarter earnings call. (Operator Instructions) And as a reminder, this conference call is being recorded. At this time, I'd like to turn the conference call over to your host, Jason VanWees. Please go ahead, sir.

女士們、先生們，感謝你們的支持，歡迎參加 Teledyne 第二季財報電話會議。（操作員指示）提醒一下，本次電話會議正在錄音。現在，我想把電話會議交給主持人 Jason VanWees。先生，請繼續。

Good morning, everyone. This is Jason VanWees, Vice Chairman. I'd like to welcome everyone to Teledyne's second quarter 2024 earnings release conference call. We released our earnings earlier this morning before the market opened. Joining me today are Teledyne's Executive Chairman, Robert Mehrabian, CEO, Edwin Roks, Senior Vice President and CFO, Steve Blackwood, and Melanie Cibik, EVP, General Counsel, Chief Compliance Officer and Secretary. President and COO, George Bobb would have joined us, but after getting stuck in airports late last week in the weekend, George came back with COVID and is being isolated.

大家早安。我是傑森‧範韋斯，副主席。歡迎大家參加 Teledyne 2024 年第二季財報發布電話會議。我們在今天早上市場開盤前公佈了我們的收益。今天與我一起出席的還有 Teledyne 執行董事長 Robert Mehrabian、執行長 Edwin Roks、資深副總裁兼財務長 Steve Blackwood 以及執行副總裁、總法律顧問、首席合規官兼秘書 Melanie Cibik。總裁兼營運長喬治鮑伯 (George Bobb) 本來會加入我們，但上週末被困在機場後，喬治感染了新冠肺炎並被隔離。

Anyway, after remarks by Robert, Edwin and Steve, we will answer your questions. However, before we get started, our attorneys have reminded me to tell you that all forward-looking statements made this morning are subject to various assumptions, risks and caveats as noted in the earnings release and our periodic SEC filings. And of course, actual results may differ materially. In order to avoid potential selective disclosures, this call is simultaneously being webcast and a replay, both via webcast and dial-in, will be available for about one month. Here's Robert.

無論如何，在羅伯特、艾德溫和史蒂夫發言之後，我們將回答您的問題。然而，在我們開始之前，我們的律師提醒我告訴您，今天早上所做的所有前瞻性陳述都受到收益報告和我們定期向美國證券交易委員會提交的文件中指出的各種假設、風險和警告的影響。當然，實際結果可能會大不相同。為了避免潛在的選擇性披露，本次電話會議將同時進行網路直播，並且透過網路直播和撥號方式的重播將持續約一個月。這是羅伯特。

Thank you, Jason. And good morning and thank you for joining our earnings call. In the second quarter, Teledyne achieved all-time record free cash flow, allowing us to deploy approximately $852 million through July on debt repayment, acquisitions and stock repurchases. Non-GAAP operating margin increased from last year and increased in each of our three largest segments.

謝謝你，傑森。早安，感謝您參加我們的收益電話會議。在第二季度，Teledyne 實現了歷史最高的自由現金流，使我們能夠在 7 月部署約 8.52 億美元用於債務償還、收購和股票回購。非公認會計準則營業利潤率較去年同期增加，且我們三大部門的營業利潤率均有所增加。

Total sales and earnings increased sequentially and exceeded our most recent expectations. Although year-over-year comparisons remain especially difficult in certain commercial markets, such as industrial automation, and electronic test and measurement.

總銷售額和收益連續成長，超出了我們最近的預期。儘管在某些商業市場（例如工業自動化和電子測試與測量）中進行同比比較仍然特別困難。

Nevertheless, strong defense-related sales at Teledyne flared and our own legacy space-based infrared imaging business partially offset the expected declines in industrial imaging systems. Furthermore, despite the anticipated year-over-year decline in certain instrumentation product lines, total instrumentation sales were a second quarter record due to exceptional performance of our marine instrumentation businesses. Primarily driven by our aerospace and defense businesses, orders were greater than sales for the third consecutive quarter, and we ended the period with record backlog.

儘管如此，Teledyne 的國防相關業務銷售強勁成長，而我們自己的傳統太空紅外線成像業務部分抵消了工業成像系統預期的下滑。此外，儘管預計某些儀器儀表產品線將同比下降，但由於我們海洋儀器儀表業務的出色表現，第二季度儀器儀表總銷售額創下了歷史新高。主要受我們的航空航太和國防業務的推動，訂單連續第三個季度高於銷售額，並且我們在本季度結束時創下了創紀錄的積壓訂單量。

Therefore, we're reasonably confident that quarterly sales will again increase sequentially, and we will return to year-over-year sales growth in the second half of 2024. Finally, even with the significant capital deployment in the second quarter, our quarter end leverage remained at $1.7 million and we plan to continue stock repurchases in the balance of 2024 as well as pursue acquisitions.

因此，我們有理由相信季度銷售額將再次環比增長，並將在 2024 年下半年恢復同比增長。最後，即使第二季進行了大量的資本部署，我們的季末槓桿率仍為 170 萬美元，我們計劃在 2024 年餘下時間繼續回購股票並進行收購。

I will now turn the call to Edwin who will further comment on the performance of our four segments.

現在我將電話轉給艾德溫，他將進一步評論我們四個部門的表現。

Thank you, Robert. This is Edwin, and I will first report on the digital imaging segment, which represents 54% of Teledyne's portfolio. And like Teledyne as a whole, this segment is a mix of longer-cycle businesses such as defense, space and health care, combined with shorter cycle markets, including industrial automation, semiconductor inspection and infrared components and cameras for applications ranging from factory condition monitoring to maritime navigation.

謝謝你，羅伯特。我是埃德溫，我將首先報告數位成像領域的情況，該領域佔 Teledyne 產品組合的 54%。與整個 Teledyne 公司一樣，該部門也是國防、航太和醫療保健等長週期業務與短週期市場相結合的混合體，包括工業自動化、半導體檢測以及用於從工廠狀態監測到海上導航等應用的紅外線組件和攝影機。

Second quarter 2024 sales declined 6.8% compared with last year. As expected, sales to industrial machine vision markets declined approximately 30% year-over-year. However, this was partially offset by increased sales from FLIR defense and from Teledyne's space-based infrared imaging detectors. Furthermore, for the fourth consecutive quarter, healthy margins across the entire FLIR business portfolio helped us protect overall operating margin, even given the significant year-over-year reduction in sales of our typically highest contribution margin product lines.

2024 年第二季的銷售額與去年相比下降了 6.8%。正如預期的那樣，工業機器視覺市場的銷售額年減約 30%。然而，這一增長被 FLIR 防務和 Teledyne 太空紅外線成像探測器的銷售額成長部分抵消。此外，連續第四個季度，整個 FLIR 業務組合的健康利潤率幫助我們保護了整體營業利潤率，儘管我們通常貢獻利潤率最高的產品線的銷售額同比大幅下降。

I will now report on the other three segments, which represent the remaining 46% of Teledyne. The Instrumentation segment consists of marine, environmental and test & measurement businesses, which contributed a little over 24% of sales. For the total segment, overall second quarter sales increased 1.6% versus last year. Sales of marine instruments increased 60% in the quarter, primarily due to strong offshore energy and subsea defense sales.

我現在將報告其他三個部門的情況，它們佔 Teledyne 剩餘的 46%。儀器儀表部門包括海洋、環境和測試與測量業務，貢獻了略高於 24% 的銷售額。就整個部門而言，第二季整體銷售額較去年同期成長了 1.6%。本季海事儀器銷售額成長了 60%，主要得益於海上能源和海底防禦銷售的強勁成長。

Sales of environmental instruments decreased 1.6% with greater sales of drugs recovery and laboratory instruments, offset by lower sales of processed gas, emission monitoring systems and gas and flame safety analyzers. Sales of laboratory test and measurement systems, which include oscilloscopes, digitizers and product analysis, decreased 5.8% year-over-year on a tough quarterly comparison versus 2023. Overall, Instrumentation segment operating profit increased in the second quarter with GAAP operating margins increasing 136 basis points to 26.1% and another 34 basis points on a non-GAAP basis to 27.2%.

環境儀器的銷售量下降了 1.6%，因為藥物回收和實驗室儀器的銷售增加，但被加工氣體、排放監測系統以及氣體和火焰安全分析儀的銷售下降所抵消。與 2023 年相比，包括示波器、數位化儀和產品分析在內的實驗室測試和測量系統的銷售季度年減 5.8%。總體而言，儀器儀表部門第二季度營業利潤有所增長，按照 GAAP 計算的營業利潤率增加了 136 個基點，達到 26.1%，按照非 GAAP 計算的營業利潤率又增加了 34 個基點，達到 27.2%。

In the aerospace and defense electronics segment, which represents 14% of Teledyne sales, second quarter sales increased 4.5%, driven by the growth of commercial aerospace and defense microwave products. GAAP and non-GAAP segment operating profits increased year-over-year with segment margin increasing approximately 77 basis points. For the engineered systems segment, which contributed 8% to overall sales, second quarter revenue decreased 8.7% and operating profit was impacted by lower sales and unfavorable program mix.

在佔 Teledyne 銷售額 14% 的航空航太和國防電子領域，第二季銷售額成長了 4.5%，這得益於商用航空航太和國防微波產品的成長。GAAP 和非 GAAP 分部營業利潤較去年同期成長，分部利潤率增加約 77 個基點。對於佔整體銷售額 8% 的工程系統部門而言，第二季營收下降了 8.7%，營業利潤受到銷售額下降和專案組合不利的影響。

I will now pass the call back to Robert.

我現在將把電話轉回給羅伯特。

Thank you, Edwin. In conclusion, our second quarter performance was a testament to the strength of our balanced business portfolio. We also continued our proven strategy of increasing margin in those businesses, which are growing, while reasonably protecting margins in businesses with more challenging markets.

謝謝你，埃德溫。總之，我們第二季的業績證明了我們均衡的業務組合的實力。我們也繼續推行行之有效的策略，即提高正在成長的業務的利潤率，同時合理地保護那些面臨更具挑戰性的市場的業務的利潤率。

Our current full year earnings outlook is identical to the last quarter with some markets such as industrial automation and electronic test and measurement remaining difficult, although year-over-year comparisons are easier in the second half, while the outlook for our global defense, energy and aerospace businesses remains strong and is supported by our record backlog.

我們目前的全年獲利預期與上一季相同，工業自動化和電子測試與測量等一些市場仍然困難，儘管下半年同比情況有所好轉，但我們全球國防、能源和航空航天業務的前景依然強勁，並受到創紀錄的積壓訂單的支持。

Finally, we continue to review acquisition opportunities. But given the strength of our balance sheet and cash flow, we also plan to continue purchasing our own stock under our current $1.25 billion authorization. I will now turn the call over to Steve.

最後，我們持續審查收購機會。但鑑於我們資產負債表和現金流的強勁，我們也計劃繼續以目前的 12.5 億美元授權購買我們自己的股票。現在我將電話轉給史蒂夫。

Thank you, Robert, and good morning. I will first discuss some additional financials for the quarter, not covered by Robert, and then I will discuss our third quarter and full year 2024 outlook.

謝謝你，羅伯特，早安。我將首先討論羅伯特未涉及的本季的一些其他財務數據，然後我將討論我們第三季和 2024 年全年的展望。

In the second quarter, cash flow from operating activities was $318.7 million compared with $190.5 million in 2023. Free cash flow, that is cash from operating activities less capital expenditures, was $301 million in the second quarter of 2024 compared with $163.2 million in 2023. Cash flow increased in the second quarter due to stronger working capital performance. Capital expenditures were $17.7 million in the second quarter of 2024 compared with $27.3 million in 2023.

第二季度，經營活動現金流為 3.187 億美元，而 2023 年為 1.905 億美元。自由現金流（即經營活動產生的現金減去資本支出）在 2024 年第二季為 3.01 億美元，而 2023 年為 1.632 億美元。由於營運資本表現強勁，第二季現金流增加。2024 年第二季的資本支出為 1,770 萬美元，而 2023 年為 2,730 萬美元。

Depreciation and amortization expense was $77.8 million for the second quarter of 2024 compared with $80 million in 2023. We ended the quarter with approximately $2.35 billion of net debt. That is approximately $2.8 billion of debt less cash of $443.2 million.

2024 年第二季的折舊和攤提費用為 7,780 萬美元，而 2023 年為 8,000 萬美元。本季末我們的淨債務約為 23.5 億美元。這大約相當於 28 億美元的債務減去 4.432 億美元的現金。

Now turning to our outlook. Management currently believes that GAAP earnings per share in the third quarter of 2024 will be in the range of $4.02 to $4.16 with non-GAAP earnings in the range of $4.90 to $5. And for the full year 2024, our GAAP earnings per share outlook is $15.87 to $16.13 and we are affirming our prior non-GAAP outlook of $19.25 to $19.45.

現在轉向我們的展望。管理層目前認為，2024 年第三季的 GAAP 每股盈餘將在 4.02 美元至 4.16 美元之間，非 GAAP 每股盈餘將在 4.90 美元至 5 美元之間。對於 2024 年全年，我們預測每股收益為 15.87 美元至 16.13 美元，同時我們確認先前的非 GAAP 預測為 19.25 美元至 19.45 美元。

I will now pass the call back to Robert.

我現在將把電話轉回給羅伯特。

We would like to take your questions. John, if you're ready to proceed with the questions-and-answers, please go ahead.

我們願意回答您的問題。約翰，如果你準備好繼續問答，請繼續。

(Operator Instructions)

（操作員指示）

Jim Ricchiuti, Needham & Company.

吉姆‧里基烏蒂 (Jim Ricchiuti)，李約瑟公司。

Hi, thank you. Good morning. I was hoping to get a little bit more color on the bookings, the book-to-bill. It sounds like the positive book-to-bill was largely driven by the aerospace and defense business, but I wonder if you could just elaborate on what you saw from an order standpoint in the quarter.

你好，謝謝。早安.我希望能獲得更多關於預訂情況、訂單出貨比的詳細資訊。聽起來積極的訂單出貨比主要是由航空航太和國防業務推動的，但我想知道您是否可以詳細說明本季從訂單角度看到的情況。

Thank you, Jim. First, you're correct in generally, overall, but I think our overall book-to-bill was 1.07. It was -- Digital Imaging was close to 1, like 0.98. Instrumentation was just over 1 at 1.04. But as you said, aerospace and defense was very strong at 1.41, and engineered systems also strong at 1.25, resulting in combined book-to-bill of 1.07 for the complete company.

謝謝你，吉姆。首先，總體而言，您的判斷是正確的，但我認為我們的整體訂單出貨比是 1.07。數位成像接近 1，例如 0.98。儀器讀數剛好超過 1，為 1.04。但正如您所說，航空航太和國防業務表現非常強勁，達到 1.41，工程系統業務表現同樣強勁，達到 1.25，因此整個公司的訂單出貨比總計為 1.07。

Got it. That's helpful. Robert, if we think about the backlog -- the longer-cycle backlog and as it converts into the second half to revenue, is that mainly defense converting? I'm wondering what other areas of the longer-cycle business might drive growth in the second half. And maybe related, what kind of expectations do you have for the short-cycle business in the back half? Thank you.

知道了。這很有幫助。羅伯特，如果我們考慮積壓訂單——週期較長的積壓訂單，以及它在下半年轉化為收入的情況，這主要是防禦性轉化嗎？我想知道長週期業務的其他哪些領域可能會推動下半年的成長。也許相關的是，您對下半年的短週期業務有什麼樣的期望？謝謝。

Let me start with the first part. Defense is, obviously, as you said, very important and is the long-cycle business that's doing pretty well. The second area is Energy. And that's our marine instruments businesses. They've done exceptionally well for the year, and we'll continue to do so. And then the third area is Aerospace, both aerospace from the computers that we have on commercial aircraft to aerospace -- and the aerospace from our imaging sensor businesses.

讓我從第一部分開始。顯然，正如您所說，防禦非常重要，而且是一項表現相當不錯的長週期業務。第二個領域是能源。這就是我們的海洋儀器業務。他們今年的表現非常出色，我們將繼續這樣做。第三個領域是航空航天，包括從商用飛機上的電腦到航空航天，以及從我們的成像感測器業務到航空航天。

Now going back to the commercial shorter cycle businesses, what we're seeing is we think that Digital Imaging as a whole, total Digital Imaging should be relatively flat in the second half of the year, that's year-over-year flat, which is good because it declined in the first half of the year. Some of the recovery that we're seeing is early signs that come from our MEMS, microelectronic mechanical systems, which are kind of like the canaries in the mine, we are seeing some uptick in orders there, which is encouraging, especially from the semiconductor industry.

現在回到商業短週期業務，我們看到的是，我們認為整個數位成像，整體數位成像在下半年應該相對平穩，即同比持平，這是好事，因為它在上半年有所下降。我們看到的一些復甦是來自 MEMS、微電子機械系統的早期跡象，它們就像礦井中的金絲雀，我們看到那裡的訂單有所增加，這是令人鼓舞的，尤其是來自半導體行業的訂單。

And then, we also have some indications that our machine vision systems, as an example, have stabilized and book-to-bill has reached 1 or a little better, which is encouraging. We're hoping that these trends will continue with semiconductor coming back and inspection businesses that we have picking up and some of our high-end thermal cameras also doing better than they have. So I think overall, we're positively inclined towards the second half of the year.

然後，我們也有一些跡象表明，以我們的機器視覺系統為例，它已經穩定下來，訂單出貨比已經達到 1 或略好一些，這是令人鼓舞的。我們希望這些趨勢能夠持續下去，隨著半導體的復甦和檢測業務的回升，我們的一些高階熱像儀也能做得更好。因此我認為總體而言，我們對下半年持正面態度。

Got it. That's helpful, Robert. Thank you.

知道了。這很有幫助，羅伯特。謝謝。

Thank you, Jim.

謝謝你，吉姆。

Andrew Buscaglia, BNP.

英國國家黨安德魯‧布斯卡利亞 (Andrew Buscaglia)。

Hey. Good morning, guys.

嘿。大家早安。

Good morning, Andrew.

早安，安德魯。

So along that line of questioning. Can you talk a little bit about your test and measurement has been a tough market. A little bit weaker in Q2, but in line, I think, with what you guys were suggesting. How do you see that playing out? Do you still feel like your expectations for down 10% for the year are valid?

因此沿著這個思路提問。您能否稍微談談測試和測量市場面臨的艱難情況？第二季稍微弱一些，但我認為，與你們的建議一致。您認為結果會怎樣？您是否仍然認為今年下降 10% 的預期是正確的？

Yeah. About that. Not to be picky, but it's -- we have 9.9%, which is very close to our 10%. But -- that's also a tale of two cities there. We -- in our test and measurement, as you know, Andrew, we have two businesses. One is the oscilloscope business, and the other one is our protocol business, which are basically rules for communication within devices and devices and the cloud. That business, the protocol business is coming back fast and it's doing better, a little bit better. It's the oscilloscope business which is lagging.

是的。關於那件事。不是挑剔，但——我們有 9.9%，非常接近我們的 10%。但——這也是兩個城市的故事。在我們的測試和測量領域，正如你所知，安德魯，我們有兩項業務。一個是示波器業務，另一個是我們的協定業務，它們基本上是設備內部以及設備和雲端之間通訊的規則。這項業務，即協議業務，正在快速復甦，而且做得更好，更好一點。示波器業務處於落後狀態。

Having said that, we took cost out in that business. And fortunately, for us, we took the cost out very early, and the margins of instruments have remained pretty well. We anticipate, for example, about almost 94 basis points improvement in our total instrument portfolio, even with part of T&M being weak, partially because our marine is very strong, and our environmental businesses are doing okay. So I don't know whether that answers your question fully or not.

話雖如此，我們還是削減了該業務的成本。幸運的是，我們很早就消除了成本，而儀器的利潤率仍然保持得相當好。例如，我們預計我們的整個儀器組合將提高近 94 個基點，儘管部分測試與測量業務表現較弱，但部分原因是我們的海洋業務非常強大，而且我們的環境業務表現良好。所以我不知道這是否完全回答了你的問題。

Yeah. No, that's helpful. And maybe sticking with instrumentation. Yeah, marine has been really strong presumably, you have good visibility there. What -- can you parse out what's driving that exactly and the confidence that, that continues into the second half? How should we think about that for the full year?

是的。不，這很有幫助。或許還會堅持使用儀器。是的，海軍實力確實很強，那裡能見度很好。您能否分析出究竟是什麼推動了這個趨勢，以及這種趨勢持續到下半年的信心？我們該如何考慮全年的情況？

Two areas. First is the offshore oil production and discovery. We have -- as you know, we have instruments that are deployed in streamers to look down at acoustic signals that bounce from the ocean floor and determine whether there is oil and gas there. That's a strong business and continues to be. The other part is, of course, our connector businesses. They are doing really well. Actually, we're almost at capacity in that business.

兩個領域。首先是海上石油生產和勘探。正如你們所知，我們部署了海底拖纜中的儀器，用於觀測從海底反射回來的聲學訊號，並確定那裡是否有石油和天然氣。這是一項強勁的業務，並將繼續如此。另一部分當然是我們的連接器業務。他們做得很好。實際上，我們的這項業務幾乎已經達到最大產能。

And then the second part of the marine business is the defense part of the business. As you know, we have defense unmanned vehicles, underwater vehicles. We also provide connectors for submarines. That business is doing really well, and our underwater vehicle businesses are doing really well. So it's a combination of offshore oil production and discovery and defense & security.

海洋業務的第二部分是國防業務。如你所知，我們有防禦無人駕駛飛行器、水下航行器。我們也提供潛水艇連接器。這項業務做得很好，我們的水下航行器業務也做得很好。因此，它是海上石油生產和勘探以及國防和安全的結合。

Okay. Thank you.

好的。謝謝。

Sure.

當然。

Conor Walters, Jefferies.

康納沃特斯，傑富瑞集團。

Hi, guys. Thanks so much for taking my questions. Just to start off, any updates of the free cash flow guidance for the year despite somewhat constrained top line in the first half? Free cash flow is tracking well ahead of your $1 billion target. What do you expect for the year and what are some of the drivers just given such a strong start in the first half?

嗨，大家好。非常感謝您回答我的問題。首先，儘管上半年營收受到一定限制，但今年的自由現金流指引有沒有更新？自由現金流遠超您 10 億美元的目標。您對今年有何期望？鑑於上半年的強勁開局，有哪些車手錶現優異？

That's a good question, Conor. I don't want to be effervescent about that because in the first two quarters, we've generated $576 million of free cash flow. I think in the second half, we have some bond payments coming due. We have some taxes coming due. So I think it's going to be less. We are hoping that our free cash flow would be above $900 million. That's where we're sitting right now with the front end being heavily loaded. But having said that, we're confident enough in our cash position to continue our purchases of our own stock.

這是個好問題，康納。我不想對此感到太興奮，因為在前兩個季度，我們已經產生了 5.76 億美元的自由現金流。我認為下半年我們會有一些債券到期。我們有一些稅金即將到期。所以我認為這個數字會減少。我們希望我們的自由現金流能夠超過 9 億美元。這就是我們現在所處的情況，前端負載很重。但話雖如此，我們對自己的現金狀況有足夠的信心，可以繼續買自己的股票。

Okay, got it. That's very clear. And maybe just jumping over into defense a little bit more. We've seen a lot of technology announcements for Teledyne, some new wins in areas such as loitering munitions. Just given this, how are you thinking about defense going forward? And any divergence within the exposure and A&D electronics and engineered versus where you are in digital imaging?

好的，明白了。這非常清楚。或許只是稍微轉向防守而已。我們看到 Teledyne 發布了許多技術公告，在巡飛彈藥等領域取得了一些新的勝利。有鑑於此，您如何考慮未來的防守？與數位成像領域相比，曝光、 A&D 電子和工程方面是否存在差異？

No. I think let's just look at the major programs that -- the announcements that keep coming out. There's a whole slew of them. The most important one, I would say, that's new is our loitering unmanned aerial vehicle, which now is weaponized, what we call Rogue 1. And we already have our first order for over 100 systems for that. And it competes very well against the competition, both in terms of precision, but also with the fact that you can send these vehicles to target. And if you decide to bring them back, you can do that easily. That's a distinguishing feature and of course, the other part is the accuracy.

不。我認為我們只需看看那些不斷發布的重大計劃和公告。有很多這樣的人。我想說，其中最重要的一項新技術是我們的巡飛無人機，它現在已經裝備武器，我們稱之為「俠盜一號」。我們已收到首批超過 100 套系統的訂單。它在精度方面以及可以將這些車輛送往目標的方面都比競爭對手有優勢。如果您決定將它們帶回來，您可以輕鬆地做到這一點。這是一個顯著特徵，當然，另一部分是準確性。

The next example as you may know is again staying with vehicles are very small mini drones. We saw the whole bunch of them over the years, what we call Black Hornet 3, which are about 6 inches in size. Black Hornet 4 was introduced this year, and we got the first production order for about almost 1,000 systems recently.

您可能知道，下一個例子是與車輛一起出現的非常小的微型無人機。這些年來，我們看到過很多這樣的昆蟲，我們稱之為“黑黃蜂 3”，它們的尺寸大約是 6 英寸。Black Hornet 4 於今年推出，我們最近獲得了第一個約 1,000 套系統的生產訂單。

We expect that, that program will continue and be a very strong contributor to our defense businesses. And these orders are from the US government right now. Then we have -- as I mentioned, we have the inserts for the Virginia ore connectors for the Virginia and Colombia class submarines.

我們預計，該計劃將繼續下去，並對我們的國防業務做出巨大貢獻。這些命令目前來自美國政府。然後我們有——正如我所提到的，我們有用於弗吉尼亞級和哥倫比亞級潛艇的弗吉尼亞礦石連接器的插件。

Those businesses have really good backlogs and are doing well. We also have drones that come out of our Canadian operations, the R70 and R80. We have orders for those, and we also have countered UAV systems that are being deployed in Europe. And finally, this is just an example, we have a very lightweight uncooled target recognition system, what we call the FWS family of weapons systems.

這些企業的積壓訂單確實很多，而且經營狀況良好。我們還有來自加拿大的無人機，R70 和 R80。我們已收到這些產品的訂單，我們還擁有正在歐洲部署的反無人機系統。最後，這只是一個例子，我們有一個非常輕的非冷凍目標識別系統，我們稱之為 FWS 系列武器系統。

That's -- we have the development order for it and we have the first production order for it. Those two combined over $70 million and expect about $500 million in IDIQ contracts. So those are just examples. I think our defense businesses, especially FLIR defense has picked up the pace very well and is -- we're very excited about that.

那是——我們有它的開發訂單，我們有它的第一個生產訂單。這兩家公司的總價值超過 7,000 萬美元，預計 IDIQ 合約價值約為 5 億美元。這些只是例子。我認為我們的國防業務，特別是 FLIR 國防業務已經取得了很好的進展，我們對此感到非常興奮。

Great. That's super helpful. I'll leave it there.

偉大的。這非常有幫助。我就把它留在那裡。

Thank you.

謝謝。

Joe Giordano, TD Cowen.

喬·喬達諾（Joe Giordano），TD Cowen。

Hey. Good morning. Robert, you said you're seeing some stability in the machine vision business, which is good to hear. I think you mentioned it was down 30 year-on-year. What was that compared to 2Q and what's the expectation for, like, 3Q and 4Q. What was that versus 1Q and what's the expectation in 3Q, 4Q versus the second quarter?

嘿。早安.羅伯特，您說機器視覺業務有所穩定，這很好。我想您提到它同比下降了 30%。與第二季相比如何？對第三季和第四季的預期如何？與第一季相比，情況如何？與第二季相比，第三季和第四季的預期如何？

Well, I think basically, they were down 30 in Q1 and Q2 as Edwin indicated. I think that's now going to be about 10 and 10 in Q3 and Q4. So for the year would be about 20. So it's going to improve, partially it's improving partially because comps are getting easier to be frank and very straightforward about it. That market began softening last year in Q3, so the comps are going to get easier. But also, we're seeing as I indicated before, we're seeing some uptick in certain areas and as you know, semiconductor industry is coming back and coming back strong, and our products are used in the inspection systems all over the world.

嗯，我認為基本上，正如埃德溫所說，他們在第一季和第二季下降了 30%。我認為第三季和第四季的數字將分別達到 10 和 10 左右。所以今年大約是 20 年。所以情況會有所改善，部分原因是公司現在越來越容易坦率和直接地對待這個問題。該市場自去年第三季起開始走軟，因此可比性將變得更加容易。但同時，正如我之前指出的，我們看到某些領域出現了一些上升趨勢，正如你所知，半導體行業正在復蘇，而且勢頭強勁，我們的產品被廣泛應用於世界各地的檢測系統。

And dust to be clear, like are the dollars for that business in 2Q higher than 1Q and will they be higher in like the second half, like dollars versus one-half dollars?

需要明確的是，第二季度該業務的銷售額是否高於第一季度，下半年的銷售額是否會更高，例如 100 萬美元對 50 萬美元？

I think our expectations right now are that they'd be relatively flat, maybe a little better in the second half. I don't want to be -- certainly, in Q4, we expect it to be stronger. But right now, we have to be very careful not to drink our own bath water because while things are looking well, good, we have both the vision systems, which are the visual systems as well as our infrared systems. So we have -- we're looking at the combo there and I think flat would be a good word with Q4 picking up.

我認為我們現在的預期是，它們會相對平穩，下半年可能會好一點。我不想這樣——當然，在第四季度，我們預計它會更加強勁。但現在，我們必須非常小心，不要喝自己的洗澡水，因為雖然一切看起來都很好，但我們既有視覺系統，也就是視覺系統，也有紅外線系統。所以，我們正在研究那裡的組合，我認為「平穩」是一個好詞，第四季將會回升。

Okay. We're also hearing some people talk about like Boeing finally telling suppliers to cool off a little bit. I know that their production has gone down. But they've been still receiving components from suppliers at the same pace. And are you seeing any of that where they're pushing back a little bit?

好的。我們也聽到一些人談論波音公司最終告訴供應商稍微冷靜一下。我知道他們的產量下降了。但他們仍以同樣的速度從供應商接收零件。您是否看到他們有稍微反擊的跡象？

We're not seeing that as much. There's some rotation going on there in our OEM products. But we're not only supplying OEMs, we're also -- the aftermarket business there is very important to us and we're doing okay there. I think overall, our aerospace business is pretty healthy.

我們很少看到這樣的情況。我們的 OEM 產品正在發生一些輪換。但我們不僅為 OEM 供貨，那裡的售後市場業務對我們來說也非常重要，我們在那裡做得很好。我認為總體而言，我們的航空航太業務相當健康。

Good. I'll get back in queue. Thanks, guys.

好的。我會回到隊列中。謝謝大家。

Guy Hardwick, Freedom Capital Markets.

哈德威克（Guy Hardwick），自由資本市場（Freedom Capital Markets）。

Hi. Good morning.

你好。早安.

Good morning, Guy.

早上好，蓋伊。

Going back to the free cash flow issue, what's your sense for when you look back on this year, where you would have deployed the free cash flow in terms of acquisition, share repurchases and debt repayments?

回到自由現金流問題，回顧今年，您認為您將自由現金流用於收購、股票回購和債務償還等方面嗎？

Well, Guy, we think because our free cash flow was so strong in the first two quarters, and you have to also keep in mind our liabilities which is our debt. Our debt is set up pretty well. It's fixed. It's -- only we will pay -- have to pay like $150 million in October time frame. Other than that, our payments start in 2026. And if you roll everything that we owe over the years, our interest payments are about 2.35%.

好吧，蓋伊，我們認為，因為我們的自由現金流在前兩個季度非常強勁，所以你也必須記住我們的負債，也就是我們的債務。我們的債務設定得相當好。已修復。只有我們會支付——必須在 10 月支付 1.5 億美元。除此之外，我們的付款從 2026 年開始。如果把我們多年來所欠的所有債務累積起來，我們的利息支出約為 2.35%。

Now, for the year, we think that we will continue buying our stock, maybe, depends on the stock price, right? We bought back quite a bit in the first half of the year. We expect to continue to do that, but we're also looking at acquisitions at the same time. So we're balancing the two as we go forward. Right now, because of our very serious efforts in 80-20 and ability to generate cash. We think that we're in a really good situation.

現在，對於今年來說，我們認為我們會繼續購買我們的股票，也許，取決於股票價格，對嗎？我們上半年回購不少了。我們希望繼續這樣做，但我們同時也在考慮收購。因此，我們在前進的過程中平衡了兩者。現在，由於我們在 80-20 方面做出了非常認真的努力，並且有能力產生現金。我們認為我們的處境非常好。

We just renewed our line of credit for another five years. We haven't touched it. We have about $1.2 billion untouched. So with no debt payments, big ones coming due, our interest rates being 2.35% over the many years, we feel good that we can do whatever we want. Right now, focused on buying back stock and looking at the acquisitions as well.

我們剛剛將信用額度延長了五年。我們還沒碰過它。我們大約有 12 億美元未動用。因此，由於沒有債務需要償還，也沒有大額債務到期，而且我們的利率多年來一直保持在 2.35%，所以我們感覺很好，可以做任何我們想做的事情。現在，重點是回購股票並專注於收購。

Okay. Thank you. And just so as a follow up, would you mind updating us on your margin expectations by segment or has nothing changed since the last quarter?

好的。謝謝。作為後續問題，您能否向我們更新各部門的利潤預期，或者自上個季度以來沒有任何變化？

No. I can do it if you wish, I can do it for the full year. We think that for the full year in instruments as an example, it should be up about 90 to 100 basis points. It's pretty healthy for us. It'll go from what was last year at 26.6% to 27.5%-plus.

不。只要你願意，我就可以做，我可以做一整年。我們認為，以工具類產品為例，全年漲幅應在 90 至 100 個基點左右。這對我們來說非常健康。該比例將從去年的 26.6% 上升至 27.5% 以上。

In digital imaging, we think that margins for the year may go down a little bit, even though -- I mentioned the headwind that we have there. But if you look at the whole portfolio while margins went down in our DALSA 2B businesses, they went up significantly in our FLIR businesses.

在數位成像領域，我們認為今年的利潤率可能會略有下降，儘管——我提到了我們在那裡面臨的阻力。但如果你看一下整個投資組合，雖然我們的 DALSA 2B 業務的利潤率下降了，但我們的 FLIR 業務的利潤率卻大幅上升了。

So we think they might go down modestly, maybe 30 basis points for the year, maybe 20. Aerospace and defense, I think we're doing really well, maybe over 100 basis points. And engineered systems which is our smallest segment, I think margins are going to be going down primarily because of the first half. And overall, we think the segment margins should be about 14, 15 basis points up from last year considering all the headwinds that we have. That's pretty good.

因此我們認為利率可能會小幅下降，今年可能下降 30 個基點，也可能下降 20 個基點。航空航天和國防，我認為我們做得很好，可能超過 100 個基點。工程系統是我們最小的部門，我認為利潤率將會下降，主要是因為上半年的情況。總體而言，考慮到我們面臨的所有不利因素，我們認為該部門的利潤率應該會比去年同期增加約 14 到 15 個基點。那非常好。

Okay. Thank you.

好的。謝謝。

Thank you.

謝謝。

Rob Jamieson, Vertical Research Partners.

Rob Jamieson，Vertical Research Partners。

Hi. Thanks, guys. I guess, just real quick one clarification just with digital imaging. Should we -- in the next two quarters, 3Q, 4Q, is there much differential between the quarters on margin to kind of get to that down 20, 30 basis points?

你好。謝謝大家。我想，只要透過數位成像就能快速澄清一下。我們是否應該——在接下來的兩個季度，即第三季度和第四季度，利潤率的季度差異是否應該很大，以至於下降 20 到 30 個基點？

Well, let me see if I can answer that well. I think in the first half if you look at Q1, the margins were about 21.8% overall in digital imaging. You look at Q2, they dropped about 20 basis points to 21.6%. We think in Q3, it will pick up to over 22%, 22.2% maybe and then go as high as 23% in Q4. So we should end the year at 22.2% even with a weak first half. So I think margins are going to keep improving, both because of the cost action that Edwin and his people have taken, but also because some of the markets are coming back.

好吧，讓我看看我是否能很好地回答這個問題。我認為，如果你看第一季的數據，你會發現上半年數位影像的整體利潤率約為 21.8%。看看第二季度，它們下降了約 20 個基點，至 21.6%。我們認為，在第三季度，這一比例將上升至 22% 以上，可能為 22.2%，然後在第四季高達 23%。因此，即使上半年表現疲軟，今年年底的成長率應該達到 22.2%。因此我認為利潤率將會繼續提高，這不僅是因為艾德溫和他的團隊採取了成本行動，也是因為一些市場正在復甦。

Perfect. That's helpful. I was actually going to ask about that next. And look, I know this is a pretty small part of your business, but I just wanted to ask a little bit more on the oscilloscope within instrumentation and test and measurement. Just one of your competitors this morning cutting their outlook on delayed R&D spend and government and China related spend. Just curious if there's anything in the end markets that you're seeing within test and measurement on the oscilloscope side that's maybe weaker or starting to improve more or is it just all kind of a little bit soft and lagging the protocols business? Any additional color there would be great.

完美的。這很有幫助。我實際上接下來要問的是這個問題。我知道這只是你們業務中很小的一部分，但我只是想多問一些有關儀器儀表和測試測量中的示波器的問題。今天上午，您的一家競爭對手下調了延遲研發支出以及政府和中國相關支出的預期。我只是好奇，在示波器方面的測試和測量領域，您是否看到終端市場中有什麼可能變得更弱或開始改善，或者只是有點疲軟並落後於協議業務？任何額外的顏色都會很棒。

Yeah. I think you've explained it very well. I think people are hesitant to spend discretionary CapEx. So in the high end oscilloscope where you make really good money is slowed down. We expect the whole business to be down about 10% year-over-year. But having said that, as with many other years, we were probably the first one out of the box early in the year in April to warn.

是的。我認為你解釋得很好。我認為人們不願意花費可自由支配的資本支出。因此，在高階示波器上賺大錢的速度已經減慢了。我們預計整個業務將年減約 10%。但話雖如此，與許多其他年份一樣，我們可能是今年 4 月初第一個發出警告的國家。

And subsequently, you see everybody else, of course, having to do the same. The advantage that we had in doing that was that in knowing that the market was going to soften, we took cost out late in Q4 and early in Q1. And as a consequence, the margins in that business have been exceptionally healthy.

隨後，你當然會看到其他人也必須這樣做。我們這樣做的優勢在於，我們知道市場將會疲軟，所以我們在第四季末和第一季初就削減了成本。因此，該業務的利潤率一直非常高。

Absolutely. No, thank you for that. I appreciate you all taking my questions.

絕對地。不，謝謝你。感謝大家回答我的問題。

Of course. Thank you.

當然。謝謝。

(Operator Instructions)

（操作員指示）

Jordan Lyonnais, Bank of America.

喬丹·里昂，美國銀行。

Good morning and thanks for taking the question. How should we think about if the US puts more restrictions on to ASML and Tokyo Electron? What would that impact be for the digital imaging segment?

早上好，感謝您回答這個問題。如果美國對ASML、東京電子等企業施加更多限制，我們該如何看待？這對於數位成像領域會產生什麼影響？

I don't see that impacting as much. We supply product to their customers. I don't want to mention the name, but this is a large customer, and we -- they use -- this is a US customer, and they use ASML equipment, which uses a critical part that we make in our MEMS factories. We don't expect to see a change in that because we're frankly supplying the customers of ASML and it's not a huge business, maybe $20 million, $25 million business, but very profitable.

我不認為這會產生太大影響。我們向他們的客戶提供產品。我不想提及名字，但這是一個大客戶，我們——他們使用——這是一個美國客戶，他們使用 ASML 設備，該設備使用了我們在 MEMS 工廠生產的關鍵部件。我們不認為這種情況會發生變化，因為坦白說，我們是在為 ASML 的客戶供貨，這不是一個大生意，可能只有 2000 萬美元、2500 萬美元，但利潤非常豐厚。

Got it. Thank you.

知道了。謝謝。

For sure.

一定。

At this time, we have no additional callers in queue.

目前，佇列中沒有其他呼叫者。

Thank you very much, Jon. I'll now ask Jason to conclude the conference call.

非常感謝，喬恩。我現在請傑森結束電話會議。

Thanks, Robert, and thanks, everyone, for joining us this morning. If you have follow-up questions, of course, feel free to e-mail me or call me the number on the earnings release.

謝謝羅伯特，也謝謝大家今天早上加入我們。當然，如果您有後續問題，請隨時給我發電子郵件或撥打收益報告中的電話號碼。