third quarter 2026
Filed Oct 21, 2026Teledyne reported all-time record quarterly sales, operating profit and non-GAAP diluted earnings per share, raised its full-year 2026 GAAP and non-GAAP EPS outlook, and announced a pending approximately $1.1 billion acquisition of Varex Imaging Corporation.
Third-quarter net sales increased 9.4%, GAAP diluted EPS increased 25.2%, non-GAAP diluted EPS increased 20.6%, operating margin expanded, free cash flow was $319.5 million, and management raised both GAAP and non-GAAP full-year EPS outlooks.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net sales (third quarter)GAAP | $1.68B | – | 9.4% |
| Cost of sales (third quarter)GAAP | $945.5M | – | – |
| Selling, general and administrative expense (third quarter)GAAP | $258.4M | – | – |
| Research and development expense (third quarter)GAAP | $78.6M | – | – |
| Acquired intangible asset amortization (third quarter)GAAP | $55.2M | – | – |
| Operating income (third quarter)GAAP | $347.2M | – | 22.8% |
| Operating margin (third quarter)GAAP | 20.6% | – | – |
| Non-GAAP operating income (third quarter)non-GAAP | $402.6M | – | – |
| Non-GAAP operating margin (third quarter)non-GAAP | 23.9% | – | – |
| Interest and debt income (expense), net (third quarter)GAAP | −$10.5M | – | (16.7)% |
| Other income (expense), net (third quarter)GAAP | $7.5M | – | 733.3% |
| Net income attributable to Teledyne (third quarter)GAAP | $272.8M | – | 23.6% |
| Diluted earnings per common share (third quarter)GAAP | $5.82 | – | 25.2% |
| Non-GAAP net income attributable to Teledyne (third quarter)non-GAAP | $315.1M | – | – |
| Non-GAAP diluted earnings per common share (third quarter)non-GAAP | $6.72 | – | 20.6% |
| Effective tax rate (third quarter)GAAP | 21.3% | – | – |
| Cash provided by operating activities (third quarter)GAAP | $352.5M | – | – |
| Capital expenditures for property, plant and equipment (third quarter)GAAP | −$33M | – | – |
| Free cash flow (third quarter)non-GAAP | $319.5M | – | – |
| Depreciation and amortization expense (third quarter)GAAP | $84.7M | – | – |
| Stock-based compensation expense (third quarter)GAAP | $12.2M | – | – |
| Net sales (nine months)GAAP | $4.91B | – | 9.0% |
| Operating income (nine months)GAAP | $974.6M | – | 18.8% |
| Operating margin (nine months)GAAP | 19.9% | – | – |
| Non-GAAP operating income (nine months)non-GAAP | $1.14B | – | – |
| Non-GAAP operating margin (nine months)non-GAAP | 23.3% | – | – |
| Net income attributable to Teledyne (nine months)GAAP | $751.3M | – | 21.3% |
| Diluted earnings per common share (nine months)GAAP | $16.02 | – | – |
| Non-GAAP net income attributable to Teledyne (nine months)non-GAAP | $880.8M | – | – |
| Non-GAAP diluted earnings per common share (nine months)non-GAAP | $18.78 | – | – |
| Digital Imaging operating income (third quarter)GAAP | $182.7M | – | 48.1% |
| Instrumentation operating income (third quarter)GAAP | $99.6M | – | 0.8% |
| Aerospace and Defense Electronics operating income (third quarter)GAAP | $77.8M | – | 10.5% |
| Engineered Systems operating income (third quarter)GAAP | $13M | – | 6.6% |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Digital ImagingHigher sales of infrared imaging detectors, components and subsystems for defense and commercial applications, maritime products, integrated defense systems, industrial and scientific imaging systems, X-ray products, and surveillance systems. The quarter included $5.5 million of incremental sales from a recent acquisition. | $903M | – | 15.0% |
| InstrumentationAn $8.3 million increase in environmental instrumentation sales, including $6.2 million of incremental sales from a recent acquisition, and a $3.4 million increase in marine instrumentation sales, partially offset by a $4.8 million decrease in electronic test and measurement instrumentation sales. | $370.5M | – | 1.9% |
| Aerospace and Defense ElectronicsHigher sales of $16.5 million for defense electronics, partially offset by lower sales of $4.6 million for aerospace electronics. | $287.4M | – | 4.3% |
| Engineered SystemsHigher sales of engineered products. | $124M | – | 7.8% |
| Digital Imaging (nine months) | $2.59B | – | 11.9% |
| Instrumentation (nine months) | $1.12B | – | 4.2% |
| Aerospace and Defense Electronics (nine months) | $851.3M | – | 8.8% |
| Engineered Systems (nine months) | $347.9M | – | 4.7% |
fourth quarter 2026 and full year 2026 outlook
- NoteFourth quarter 2026 GAAP diluted earnings per share: $5.68 to $5.83
- NoteFull year 2026 GAAP diluted earnings per share: $21.71 to $21.87
- NoteFourth quarter 2026 non-GAAP diluted earnings per share: $6.60 to $6.70
- NoteFull year 2026 non-GAAP diluted earnings per share: $25.40 to $25.50
- NoteThe non-GAAP outlook excludes certain transaction and integration costs and acquired intangible asset amortization.
Capital returns
- During the third quarter of 2026, the company repurchased approximately 0.2 million of its shares for $94.8 million.
- Stock repurchases in September and through October 19th totaled $224.6 million at a weighted average price of $607.03 per share.
What drove it
- Third-quarter 2026 net sales included $11.7 million in incremental sales from recent acquisitions.
- Digital Imaging organic growth accelerated and was led by sales of infrared detectors and subsystems for space and unmanned applications.
- Each major commercial imaging business, including industrial vision sensors and systems and healthcare, increased year-over-year.
- Digital Imaging operating income increased primarily because of higher net sales and favorable product mix.
- Aerospace and Defense Electronics operating income benefited from higher sales and improved margins at recently acquired businesses.
- Orders exceeded sales every quarter over the last three years, and funded backlog was nearly $5.3 billion.
Concerns
- Instrumentation sales increased 1.9%, with higher environmental and marine instrumentation sales partially offset by a $4.8 million decline in electronic test and measurement instrumentation sales.
- The effective tax rate increased to 21.3% from 19.3%, while net discrete income tax benefits declined to $1.6 million from $4.9 million.
- Cash provided by operating activities benefited from favorable operating results but was partially offset by higher inventory purchases.
- Corporate expense increased to $25.9 million from $22.0 million, primarily related to higher professional services and compensation costs, including incentive compensation.
- The pending Varex acquisition remains subject to customary closing conditions, including regulatory approvals and approval by Varex stockholders.
What to watch
- Fourth-quarter 2026 GAAP diluted EPS outlook of $5.68 to $5.83 and non-GAAP diluted EPS outlook of $6.60 to $6.70.
- Completion of the Varex transaction, expected in early 2027, and the subsequent inclusion of Varex in the Digital Imaging segment.
- Varex's special meeting scheduled for October 28.
- Digital Imaging demand for infrared detectors, components and subsystems across defense, commercial, space and unmanned applications.
- Instrumentation trends, particularly electronic test and measurement instrumentation sales.
- Cash deployment between the pending Varex acquisition, available credit-facility borrowings, debt reduction and stock repurchases.
Balance sheet and cash flow
- Cash and cash equivalents as of September 27, 2026: $562.4 million, compared with $352.4 million as of December 28, 2025.
- Total debt as of September 27, 2026: $2,027.8 million, compared with $2,475.4 million as of December 28, 2025.
- Net debt as of September 27, 2026: $1,465.4 million, compared with $2,123.0 million as of December 28, 2025.
- Quarter-end consolidated leverage ratio: 0.9x.
- $1,158.4 million was available under the $1.20 billion credit facility as of September 27, 2026, after reductions of $41.6 million in outstanding letters of credit.
- Cash provided by operating activities was $352.5 million for the third quarter of 2026, compared with $343.1 million.
- Free cash flow was $319.5 million for the third quarter of 2026, compared with $313.9 million.
Analysis
Teledyne delivered record third-quarter sales, operating profit and non-GAAP diluted earnings per share. Net sales increased to $1,684.9 million from $1,539.5 million, while GAAP diluted EPS rose to $5.82 from $4.65 and non-GAAP diluted EPS rose to $6.72 from $5.57. GAAP operating income increased to $347.2 million from $282.8 million, and GAAP operating margin increased to 20.6% from 18.4%. Non-GAAP operating margin increased to 23.9% from 22.1%, reflecting both higher revenue and favorable mix.
Digital Imaging was the principal growth and earnings driver. Its sales increased 15.0% to $903.0 million and GAAP operating income increased 48.1% to $182.7 million. Management cited demand for infrared imaging detectors, components and subsystems in defense and commercial applications, alongside higher maritime, integrated defense, industrial and scientific imaging, X-ray and surveillance sales. The segment included $5.5 million of sales from a recent acquisition. Instrumentation grew 1.9%, restrained by lower electronic test and measurement sales, while Aerospace and Defense Electronics grew 4.3% on higher defense electronics sales that more than offset lower aerospace electronics sales.
Cash generation remained strong. Cash provided by operating activities was $352.5 million and free cash flow was $319.5 million, compared with $343.1 million and $313.9 million, respectively, in the prior-year quarter. Teledyne ended the period with $562.4 million of cash and cash equivalents, $2,027.8 million of total debt and $1,465.4 million of net debt. The company reported a quarter-end consolidated leverage ratio of 0.9x and repurchased approximately 0.2 million shares for $94.8 million during the quarter. Repurchases in September through October 19 totaled $224.6 million at a weighted average price of $607.03 per share.
The company is also allocating capital toward the pending acquisition of Varex, a cash transaction valued at approximately $1.1 billion that is expected to close in early 2027. Teledyne plans to fund the transaction with cash on hand and available credit-facility borrowings, and Varex will be included in Digital Imaging after closing. Separately, Teledyne recorded a $10.6 million gain in other income (expense), net during the quarter from marking its Varex shares to market.
Management raised full-year 2026 GAAP diluted EPS outlook to $21.71 to $21.87 from the prior outlook of $20.73 to $20.99, and raised non-GAAP diluted EPS outlook to $25.40 to $25.50 from $24.45 to $24.65. Fourth-quarter outlook is $5.68 to $5.83 for GAAP diluted EPS and $6.60 to $6.70 for non-GAAP diluted EPS. The raised outlook follows nine-month GAAP diluted EPS of $16.02 and nine-month non-GAAP diluted EPS of $18.78, with ongoing strength in Digital Imaging and funded backlog nearly $5.3 billion as key demand indicators.
Management, verbatim
Our third quarter sales and operating earnings were the strongest in Teledyne’s history.
Robert Mehrabian, Executive Chairman
Organic growth accelerated in our Digital Imaging segment and was led by sales of infrared detectors and subsystems for space and unmanned applications.
Robert Mehrabian, Executive Chairman
For all of Teledyne, orders exceeded sales every quarter over the last three years, and funded backlog is now nearly $5.3 billion.
Robert Mehrabian, Executive Chairman
Not in the filing
stated, not guessed- Gross margin for the third quarter and nine months
- Revenue guidance
- Gross-margin guidance
- Operating-expense guidance
- Tax-rate guidance
- Dividend declaration or dividend amount
- Prior-quarter comparisons for reported third-quarter metrics
- A separately provided previous outlook section for formal actual-versus-prior-guidance comparison
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.