Ladies and gentlemen, good morning. Thank you for standing by and welcome to the Teledyne fourth quarter earnings call. At this time, all lines are in a listen only mode. Later, there will be an opportunity for your questions and instructions will be given at that time. If you should require any assistance today, please press star followed by the 0 and an AT&T operator will assist you. As a reminder, today's conference is being recorded. This time it's my pleasure to turn the conference over to our host, Mr. Jason Van Wees. Please go ahead. Thank you, Tom, and good morning, everyone. This is Jason VanWees, Vice Chairman of Teledyne, and I'd like to welcome everyone to Teledyne's fourth quarter and full year 2022 earnings release conference call. We released our earnings earlier this morning before the market opened. Joining me today are Teledyne's Chairman, President, and CEO, Robert Mehrabian, Senior Vice President and CFO, Sue Yap, Senior Vice President, General Counsel, Chief Compliance Officer, and Secretary, Melanie S. Cibik. Also joining today is Edwin Roks, Executive VP of Teledyne. After remarks by Robert and Sue, we will ask for your questions. Of course, though, before we get started, attorneys have reminded me to tell you that all forward-looking statements made this morning are subject to various risks, assumptions, and caveats as noted in the earnings release and our periodic SEC filings. 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 approximately one month. Here's Robert. Thank you, Jason. Good morning, thank you for joining our earnings call. 2022 ended up being an excellent year. We concluded it with all-time record quarterly and full year sales and earnings per share. During 2022, Teledyne, as with many other companies, found itself faced with external forces beyond our control. These were inflation, strong dollar, and parts shortages. Nevertheless, we continued our long history of navigating difficult market environments, and we ultimately delivered earnings in excess of our own expectations. Excluding foreign currency headwind, which negatively impacted fourth quarter sales growth by approximately 2.6%, growth in local currency would have been 5.7%. Excluding ETM acquisition, core growth in local currency would have been approximately 5%. GAAP operating margin of 19.3% was an all-time record. Non-GAAP operating margin of 22.4% increased 95 basis points from last year. GAAP and non-GAAP earnings of $4.74 and $4.94 respectively, were also records for Teledyne. Fourth quarter free cash flow was reasonably healthy. Included interest payments of approximately $30 million, which last year were made in the third quarter of 2021. While we completed the acquisition of ETM, our leverage ratio continued to decline from 3.8x in May of 2021, when we acquired FLIR, to 2.4x at the end of 2022. Finally, our acquisition pipeline remains healthy, as evidenced by the recent addition of ChartWorld, whose maritime navigation software and hardware tools bridge a product and technology gap between our Teledyne Marine and Raymarine businesses. Turning to our 2023 full year outlook. While still very early in 2023, and with many unknowns, including projections of a recession, we're inclined to offer an initial revenue and earnings outlook in line with consensus expectations. On revenue, we see total 2023 sales growth of approximately 5%, including incremental sales from recent bolt-on acquisitions. For our backlog-driven long cycle businesses, we expect growth to be higher than average. For the majority of our short cycle commercial businesses, foreign currency headwind will impact the first quarter of 2023, where comparisons are tough and economic uncertainty and export regulations remain fluid. We continue to see overall growth, not contraction in these businesses, but expect that growth will be less than the total company average. On the other hand, supply chain constraints are improving, albeit modestly. There are a few minor other known puts and takes, such as increased scope on our NASA contract at Engineered Systems, equally offset by the 2022 completion of our OneWeb contract in the Aerospace and Defense Electronics segment, but no other significant items to highlight this early in the year. Our earnings outlook, approximately 50 basis points of margin improvement in 2023, and we currently think Instrumentation and Digital Imaging will be above average contributors to this, while margins at Aerospace and Defense Electronics may be flat or decline slightly given especially tough comps as a greater mix in 2023 of defense electronics relative to commercial aerospace aftermarket sales. I will not further comment on the performance of our core segments. In our Digital Imaging segment, fourth quarter sales were relatively flat despite currency translation headwind of approximately 3.5%. Sales increased year-over-year for our industrial and scientific vision systems, as well as our low dose, high resolution digital X-ray detectors. Sales of commercial infrared imaging cameras and components also increased and were at record levels since closing the FLIR acquisition in May of 2021. While total FLIR-related sales increased sequentially from the third quarter, sales of some surveillance and unmanned ground systems declined from last year on a especially tough comparison. On the other hand, sales of unmanned air systems increased considerably year-over-year. GAAP segment operating margin was 18.8% and adjusted for intangible asset amortization only, segment margin was 23.8%, approximately 50 basis points greater than the fourth quarter of last year. In our Instrumentation segment, overall fourth quarter sales increased 7.9% versus last year, despite approximately 2.4% of FX translation headwind. Sales of electronic test and measurement systems, which include oscilloscopes, digitizers, and protocol analyzers, increased 3.8% year-over-year, despite a tough comparison with the fourth quarter of last year's. Sales of both oscilloscopes and protocol analyzers remained healthy with continued strength in products for industry standards such as Peripheral Component Interconnect Express or PCI Express and Universal Serial Bus or USB. Sales of environmental instruments increased 9% compared with last year, with greater sales of both drug discovery and laboratory instruments as well as air monitoring and process gas analyzers. Sales of marine instrumentation increased 9.8% in the quarter, primarily due to strong marine defense sales and the ongoing recovery in offshore energy markets. Overall, Instrumentation segment operating profit increased 18.4% in the fourth quarter, with GAAP operating margin increasing 215 basis points to 24.2% and 163 basis points on a non-GAAP basis, excluding intangible asset amortization, which brought the non-GAAP margins to 25.3%. In Aerospace and Defense Electronics segment, fourth quarter sales increased 8.9%, driven by broad-based growth of both defense and commercial aerospace products. GAAP and non-GAAP segment our operating profit increased approximately 30% with margins over 480 basis points greater than last year. In the Engineered Systems segment, fourth quarter revenue increased 6.7%, but operating profit declined given lower margins for some of our electronic manufacturing service products. Before I turn the call over to Sue, I want to make a couple of concluding remarks. First, I was very pleased that Teledyne was able to overcome issues faced by most companies in 2022. Despite the macroeconomic and supply chain challenges noted earlier, our results exceeded the top end of our earnings outlook issued at any point during the year. While difficult to predict outcomes in 2023, we are reasonably confident that a number of our long cycle businesses serving defense, medical, energy, and aerospace markets will grow. While demand is more difficult to predict in our short cycle Instrumentation and imaging businesses, supply chain constraints and the premiums for gray market electronic components have begun to ease modestly. Given the strength of our balanced business portfolio and our management's long history of navigating challenging markets, I'm optimistic that Teledyne will continue on its successful path in 2023. I will now turn the call over to Sue. Thank you, Robert. Good morning, everyone. I will first discuss some additional financials for the quarter not covered by Robert, and then I will discuss our first quarter and full year 2023 outlook. In the fourth quarter, cash flow from operating activities was $237.7 million, compared with cash flow of $295.6 million for the same period of 2021. The fourth quarter of 2022 reflected greater interest payments due to the timing of fixed rate bond interest and increased inventory purchases compared with the fourth quarter of 2021. Free cash flow, that is cash from operating activities less capital expenditures, was $203.6 million in the fourth quarter of 2022, compared with $261.6 million in 2021. Capital expenditures were $34.1 million in the fourth quarter of 2022, compared with $34 million in 2021. Depreciation and amortization expense was $81.8 million for the fourth quarter of 2022, compared with $86.2 million. In addition, non-cash inventory step-up expense for the fourth quarter of 2021 was $47.8 million, with no comparable amount recorded in the fourth quarter of 2022. We ended the quarter with approximately $3.28 billion of net debt. That is approximately $3.92 billion of debt, less cash of $638.1 million. Our stock option compensation expense was $6.2 million in the fourth quarter of 2022, compared with $6.4 million in 2021. Turning to our outlook. Management currently believes that GAAP earnings per share in the first quarter of 2023 will be in the range of $3.57-$3.69 per share, with non-GAAP earnings in the range of $4.37-$4.47. For the full year 2023, our GAAP earnings per share outlook is $15.80-$16.10, and on a non-GAAP basis, $19.00-$19.20. The 2023 full year estimated tax rate, excluding discrete items, is expected to be 23%. I will now pass the call to Robert. Thank you, Sue. We would now like to take your questions. Operator, if you're ready to proceed with the question and answers, please go ahead. Thanks much. Ladies and gentlemen on the phone lines, if you wish to ask a question today, please press 1 followed by the 0. Now, you'll hear an acknowledgment that you've been placed in queue. You can take yourself out of the queue by simply pressing the 1 0 command again. Again, for questions, please press 1 followed by 0. We'll begin today with a question from Greg Konrad, representing Jefferies. Please go ahead. Good morning. Good morning, Greg. Good quarter. I mean, maybe just to start, given your commentary around supply chain and long cycle outperforming in 2023, can you maybe just update us on your expectations for defense across the businesses? I mean, it seems like peers have called out somewhat underperformance on supply chain this year. What are you seeing just in terms of the supply side and also in terms of demand? Frankly, we think defense, while the growth was relatively modest in 2022, it was 2%-3%. Generally our U.S. government businesses. We think in 2023, it'd be about 5% organic growth, so we're relatively optimistic. I mean, I was pleasantly surprised with just margins in the commentary. I mean, some of them seemed, you know, very outside across the segments. Just in terms of your margin commentary for this year, you know, what are some of the assumptions around price and inflation, FX, and just looking at that Q4 outperformance, anything unusual in that, just when we think about the opportunities for 2023? Well, I think, basically in 2022, we hit just about every cylinder at the end of the quarter, especially the last month and a half. Things turned out very favorably. On 2023, we think Q1 is gonna be softer, just like we had in 2022. Mostly we have some headwinds from FX in first quarter. We think there'd be a decline in our revenue, maybe as much as 10%, but we don't know. It's too early. Maybe 1% of headwind, maybe 1% of revenue decline, I would say that. On the other hand, I think we will pick up in Q3, Q4, just like we did this year. Right now, early in the year, the two weeks, we have some slower orders in some of our short cycle businesses. The last two weeks they seem to be picking up. Overall, Greg, I'm optimistic about 2023 altogether. Maybe just sneaking one last one in. I mean, how are you thinking about free cash flow in 2023, just given top line growth, margin expansion, and any working capital needs? I mean, in the past you've talked about, you know, a target. How are you thinking about 2023 in terms of free cash flow? Yeah, I think just pausing for a second because this will be asked. In 2022, we were a little short on cash. Well, a little, $200 million to be exact. We think that's not gonna happen in 2023. We think our cash in 2023 is gonna be higher, approximately be $900 million in cash. Whereas in 2022, we really had to be very careful. We built a little more inventory than we wanted to, primarily because of the shortages. You know, we fell about $30 million short on revenue in the fourth quarter because of shortages. Also in 2022, there was that lack of R&D deductibility, which everybody's referred to. That cost us about $40 million, we had about $60 million of more cash taxes, which brings us into $200 million. We don't think that's gonna repeat itself in 2023, so we're optimistic. Thank you. next we're going to go to the line of Elizabeth Grenke representing Bank of America. Your line is open. I just a couple questions. One, in the 5% revenue growth guidance, can you break out what is price and what is volume in that? I think it's a little too early to do both, but I'll tell you, that's about 3.5% of organic growth and then 1.5% from our acquisitions that we made, including the most recent one that we announced. If you look at projections from GDP and inflation at the current time, I'm one of those people that doesn't really believe in these projections at this point. The projections are that real GDP in the U.S. will only grow 1.4% in 2023, and inflation will drop to about 2.7%. Overall developed markets, probably GDP will grow 1.1%. That's what the projections are. Maybe a little higher in inflation. Elizabeth Grenke, it's a little too early for me. I don't think the economists know either, so I'll just say that we expect to have an organic growth of 3.5% at this time. If things move like they did in 2022, hopefully we'll increase that and of course we'll make more acquisitions too. Okay. Can you give us a little more detail on your outlook by segment and where you see the most opportunity for upside? Sure. First, I think, in the Instrumentation, which includes marine, environmental, and test and measurement, we expect growth to be about 5% or average of the company. Of course, that doesn't have acquisitions in it. In the Digital Imaging segment as a whole, we are gonna expect a 5% growth, maybe 5.1%. Aerospace and Defense, maybe 4%. Engineered Systems, maybe a little over 5%. Part of the reason for Aerospace and Defense being a little less than the average, last year we had that OneWeb program that we ended successfully, which contributed about $20 million in revenue. On the other hand, in Engineered Systems, we think we'd be a little above the average because we won that very successfully, won the NASA MOSSI contract, which adds about $20 million. At this point, that's all I can say about that. Thank you very much. Sure, Elizabeth. We'll go to the line of Jim Ricchiuti with Needham & Company. Please go ahead. Hi, thank you. Is it the short cycle commercial business where if you looked at 2023, Robert, where there might be some upside, or are there some parts of the long cycle business that could drive the upside versus the 5% that you're talking about for the company as a whole? I think if I broke it down, the marine businesses have a little longer look at them. We think marine as a whole, also because the energy, offshore energy markets are improving, and our projections for that are over 7%, maybe as much as 7.5% in marine. The short cycle businesses, which is environmental test and measurement, we think that'd be about 3.5% together. We think that I've already talked about some of the others. In Digital Imaging, where we did have a really good year and a really good fourth quarter, which was in DALSA and e2v, we think we're gonna be relatively flat organically, but we made some acquisitions, that should give us about with acquisitions, maybe 3.8%. We think FLIR would do better next year, maybe a little over 5%, 6%. It's split between defense and aerospace. Defense is longer cycle than aerospace. If you discount the $20 million that we don't have in OneWeb, we think defense will grow some. Aerospace may be flat, more short cycle. I've already talked about Engineered Systems and the MOSSI, which we want, which are longer cycle businesses. We feel comfortable there. Robert, it sounds like you're relatively positive on or constructive on what you're seeing out in the market. If I look at your commercial businesses, you alluded to some variability in bookings trends in some parts of the business, and maybe you could provide a little bit more color on that. Is there anything that you're seeing in the commercial areas, whether it's test and measurement or machine vision, that might be consistent with a slowing economy? Yeah, a little bit. I think you hit it on the head. Just a sliver, I'd say, in, if you look at Teledyne Marine, our book-to-bill in the fourth quarter was 1.15. That's why I said it's longer cycle, we feel good about it. Just going to specifically what you said, environmental and test and measurement, while for the whole year, our book-to-bill is about one, in the fourth quarter, it dropped down to 0.96. To me, that's a sliver lower, so we're a little cautious about that. DALSA E2V dropped even further a little bit. I think FLIR would be okay, but some of our vision systems and scientific cameras, we just hit it out of the park in the fourth quarter, and we think we're a little cautious about predicting. At the other side, I mean, just to cut to the chase, the other side is that it's very early, you know? Everybody's predicting one thing or another. All we're doing is we're gonna hunker down, and we're gonna do what we always do. If we have to cut, we'll cut, and if we have to hire, we'll hire, and we'll do what we have to do to make our numbers. Last question. Was the book-to-bill around 1 for the company as a whole? Yeah, just under one, about 0.96, 0.97. That has Engineered Systems in it, which was 0.9, but that's very lumpy. For the year, Engineered Systems was 1.12, which is long cycle business. For the year, the company was closer to one. Got it. Thanks very much. For sure. Our next question will come from the line of Joe Giordano with Cowen. Please go ahead. Hey, guys. How are you? Good morning, Joe. Very well. I've been hearing more people talk about risks, like maybe in the second half of the year, from prices actually going down, just given some of the deflationary characteristics you're seeing in prices paid and things like that. Is that something that you're seeing? Like, how do you think about price and your ability to continue to raise, or is it more about supporting where they are now? In 2022, we added, Joe, we added about 4% in pricing. If you hold against that, what we ended up spending, we had wages go up 4.5. Overall, buying stuff, about $2.5 billion of direct and indirect materials, that went up overall, about 6.7%. That's on the cost of goods sold. I'm only saying this because I wanna put this in perspective. We increased prices across the board 4%. Our materials inflation was 3.7% negative. Our wages were 1% negative to sales. When you add those two-Sales, materials inflation was and wage inflation was 4.7% negative. We increased prices 4%. Net-net, we suffered about 60 basis points of detriment between the two. Going forward, we expect to increase prices. How much? It's difficult to predict because, as you said, some people are talking about decreasing prices in the second half. We have to increase prices somewhat because we're gonna have more inflation that we inherited, and we're gonna have to with giving our employees about 4% raises across the board. To make up for that, we have to increase prices somewhat. Depends on how the market behave itself. We're right now saying our overall margins are gonna improve 50 basis points versus last year. That's pretty good. We'll have less broker premiums. Last year, we paid $90 million excess fees to our brokers for parts. We think in 2023, that will maybe be half. I mean, It's a long answer to a short question. There's a lot of unknowns, but I feel, we'll maintain our prices or maybe increase them a little. If I think about your, the bottom end of your guide, I mean, it's a pretty narrow guide, but if I think about the bottom end of that guide, how protected do you think you are if there is like? What kind of recessionary outlook does that have? If we do, you know, some of these macro indicators are pretty bad. If we do go into a recession, do you feel like you have coverage there at the bottom end of the guide, and, like, which businesses, like, do you Are you anticipating declines at certain businesses at the bottom end? Well, the longer cycle businesses are less cyclical, which would be our government defense, about 25% medical, scientific, energy, aerospace in overall, which constitutes about 40% of our portfolio. I don't think those are gonna be affected. On the flip side, the short cycle businesses would constitute 60% of our overall portfolio. If the world macroeconomy really suffers, obviously, we're gonna have to take some hits. As you said, we have a very narrow range that we came out with, primarily because we're not sure what's gonna happen. We could have probably had a larger range, but coming out of 2022 as strongly as we did, we feel okay about that. Last one for me. Have you internally started cutting things? Like, have you started to be a little bit more judicious on expenses and travel and things like that in anticipation of things weakening, or is that you'll adjust as necessary? Oh, no, that's the mode of our operation. It's something we do day in, day out, regardless of what the macroeconomics are. We control everything. We control expenses, in travel. We eliminate square footage of our manufacturing facilities. Everything we do, we're vigilant. With that's the only way we made it through 2022 as well as we did, and we're gonna continue that. Thanks, Robert. For sure. We'll give a final reminder. If you would like to ask a question, please press one followed by zero. One followed by zero. We'll go to the line of Guy Hardwick representing Credit Suisse. Please go ahead. Hi, good morning. It's been about 20 months since Teledyne closed on FLIR. Can you give us a bit of insight as to how, you know, to combine the portfolios is progressing, whether there is any you've seen some revenue benefits from combining the two technology platforms? I mean, in the past, you've done the same with DALSA and e2v. I'm just wondering if there's any comparable success stories or potential success stories to come from that? Thank you, Guy. Good question. The answer is yes. We have some new products. We have some new markets, especially in machine vision and, for example, also mapping. You know, FLIR has this Raymarine business, and we've had this geospatial business where we do a lot of hydrographic mapping. The most recent acquisition that we made, ChartWorld, bridges the gap between those two. I don't know if we would have bought ChartWorld if we didn't have FLIR, if we were just all geospatial. Those are really good. The other thing is that FLIR has really exceptional products in the unmanned aerial vehicle domain. We have had historically good products at Teledyne Legacy in the underwater domain. FLIR also brings now ground-based vehicles. Now you look at the combination of the two companies. We have about $450 million or so of revenue in unmanned vehicles. Unmanned air vehicles, unmanned ground vehicles, unmanned underwater vehicles. There's a lot of common technologies between those three in terms of control, in terms of software, in terms of digitization and imaging. Those are some examples, guys, at least after 20 months, but that will of course grow as a function of time. Okay. Thank you. Just quick follow-up. I'm just trying to understand the FX guidance implied in your guidance because it looks like at current rates that FX actually could be a tailwind in the second half. It could be. We think in the first half, certainly in first quarter, we think it's gonna be a 1% headwind versus the 2.1%-2.5% last year. Having said that, I don't think anybody knows. I don't think the economists know. They might say it, but they don't know. I don't think anybody knows what's gonna happen. I certainly don't. Let me put it that way. Okay. Can you just clarify what rates you perhaps, what dollar Euro rate you have currently? Well, currently it's EUR 1.09. Euro- That's not what you're using in guidance though, right? We're using about 1.06. Okay. Thank you. There are no other questions queued up at this time. Thank you very much. Operator, I will now ask Jason to conclude our conference call. Thanks, Tom, and thanks everyone for joining. Of course, if you have follow-up questions, certainly feel free to call me or email me. My phone number is on the earnings release. Tom, if you could give the replay information on the call and conclude, we'd appreciate it. Thanks all. Absolutely. Thank you. Ladies and gentlemen, this conference will be available for replay starting at 10:00 A.M. Pacific this morning and running through February 25th at midnight. You may access the AT&T playback service at any time by dialing 866-207-1041 and entering the access code of 347-2355. International participants, you can dial 402-970-0847. Those numbers again are 866-207-1041. International participants, please dial 402-970-0847 and enter the access code of 347-2355. That does conclude our conference for today. We thank you for your participation in using the AT&T event services. You may now disconnect.