Teledyne Technologies sells imaging sensors, measuring instruments and electronic systems to industrial customers, equipment manufacturers and governments. In its third quarter of fiscal 2026, sales rose 9.4%, while operating profit rose 22.8%, led by Digital Imaging. Over the first nine months, the business generated enough cash to repay debt, invest and repurchase shares while increasing its cash balance. That strengthens its ability to finance the planned Varex acquisition, whose product fit is clearer than its near-term cash contribution.
Analysis period: quarter and nine months ended September 27, 2026. Research cutoff: October 24, 2026, New York date; the latest company filing used is dated October 23.
Source: Teledyne third-quarter 2026 Form 10-Q, financial statements, pp. 2–7; Notes 2–4; and management’s discussion, pp. 25–34.
1. Imaging supplied most of the increase in operating profit
Digital Imaging produced about 92% of Teledyne’s quarterly increase in operating profit. Customers bought more infrared detectors and related components, defense systems, maritime products, industrial cameras and X-ray products. The mix of products sold also became more profitable: production costs consumed a smaller share of imaging sales.
The improvement was large enough to lift the whole company’s operating margin—the portion of sales left after operating expenses—from 18.4% to 20.6%. That means Teledyne retained about $20.60 of operating profit from every $100 of sales, compared with $18.40 a year earlier.
| Consolidated results; USD millions except EPS and margins | Third quarter 2025 | Third quarter 2026 | First nine months 2025 | First nine months 2026 |
|---|---|---|---|---|
| Sales | 1,539.5 | 1,684.9 | 4,503.1 | 4,907.5 |
| Operating profit | 282.8 | 347.2 | 820.3 | 974.6 |
| Operating margin, calculated | 18.4% | 20.6% | 18.2% | 19.9% |
| Net income attributable to Teledyne | 220.7 | 272.8 | 619.2 | 751.3 |
| Diluted earnings per share, USD | 4.65 | 5.82 | 13.06 | 16.02 |
Source: 2026 third-quarter Form 10-Q, consolidated income statement, p. 2. Both quarterly comparisons cover 13 weeks; both cumulative comparisons cover 39 weeks. Margins are operating profit divided by sales.
Digital Imaging’s quarterly sales rose 15.0%, and its operating profit rose 48.1%. Higher sales of infrared detectors, components and subsystems contributed $47.5 million of the segment’s $117.6 million sales increase. Management identified favorable product mix as the reason production costs fell from 55.4% to 53.3% of segment sales. Selling and administrative costs also grew more slowly than sales.
The following table shows why imaging matters so much. Segment profits exclude corporate costs, which must be deducted to reach consolidated operating profit.
| Segment; USD millions | Third-quarter 2025 sales | Third-quarter 2026 sales | Third-quarter 2025 operating profit | Third-quarter 2026 operating profit |
|---|---|---|---|---|
| Digital Imaging | 785.4 | 903.0 | 123.4 | 182.7 |
| Instrumentation | 363.6 | 370.5 | 98.8 | 99.6 |
| Aerospace and Defense Electronics | 275.5 | 287.4 | 70.4 | 77.8 |
| Engineered Systems | 115.0 | 124.0 | 12.2 | 13.0 |
| Corporate expense deducted | — | — | -22.0 | -25.9 |
| Consolidated total | 1,539.5 | 1,684.9 | 282.8 | 347.2 |
Source: 2026 third-quarter Form 10-Q, Note 3, pp. 10–12, and Digital Imaging discussion, p. 30. Segment sales exclude intersegment sales. The imaging contribution is its $59.3 million profit increase divided by the company’s $64.4 million increase.
Acquisitions were a small part of this quarter’s sales expansion. They added $11.7 million of the company’s $145.4 million increase, including $5.5 million in Digital Imaging. Subtracting the disclosed acquisition contribution leaves growth of 8.7% against last year’s sales. That calculation still includes currency and pricing effects; it does not measure additional units sold.
The longer comparison also supports a meaningful improvement in profitability. Teledyne’s third-quarter operating margin was 18.8% in both 2023 and 2024, before falling to 18.4% in 2025 and reaching 20.6% this quarter. These are reported company results, including changes in the businesses owned. The conclusion is that Teledyne now earns more operating profit from each sales dollar than in those earlier third quarters, with imaging doing most of the work.
Sources: 2026 third-quarter Form 10-Q, p. 27; SEC company facts, consolidated quarterly sales and operating income for the periods ended October 1, 2023, September 29, 2024, September 28, 2025 and September 27, 2026. Historical inputs appear in the calculation notes.
2. Defense customers and firm orders support growth, while some commercial businesses lag
U.S. government business supplied 72% of the quarter’s sales increase. Sales to the government, including work through prime contractors, increased from $397.0 million to $501.7 million. Its share of total sales rose from 25.8% to 29.8%. This customer measure includes government work beyond defense, so it should not be treated as an exact defense-sales total.
Digital Imaging accounted for most of that increase. Management separately said infrared products for space and unmanned applications led imaging growth. There is a concrete customer spending program behind this opportunity: in July, the Space Development Agency awarded agreements for 36 additional missile-tracking satellites, with launch availability targeted for the end of 2028. Those satellites use infrared sensing systems. The awards went to L3Harris and Sierra Space; their full contract values are not Teledyne revenue. They nevertheless show why demand for the type of components Teledyne supplies can extend beyond one quarter.
Sources: 2026 third-quarter Form 10-Q, Note 4, pp. 13–14; Teledyne earnings release, October 21, 2026, executive commentary, p. 2; Space Development Agency award announcement, July 13, 2026.
Teledyne’s firm orders for work still to be completed reached $5,514.4 million, up 19.6% from $4,611.7 million at the end of 2025. Management expects approximately 72%, or a calculated $3.97 billion, to become revenue over the next 12 months. These orders exclude unexercised options and possible future orders under open-ended contracts. Management also reported nearly $5.3 billion of funded backlog and said orders had exceeded sales in each quarter for three years. Funded backlog and the accounting measure of remaining work have different scopes and are not interchangeable.
That order base gives factories a substantial schedule of work. It also makes delivery, export approvals and payment timing more important. Teledyne says previous U.S. government shutdowns delayed awards, shipments, export licenses and invoice payments. A growing order book supports future sales only as the company can perform the work and meet the contract requirements.
Sources: 2026 third-quarter Form 10-Q, Note 4, p. 14, and operating trends, p. 25; 2025 Form 10-K, Note 5, remaining performance obligations, p. 67; October 21 earnings release, p. 2.
The strongest counterevidence comes from other parts of the portfolio. Instrumentation’s quarterly sales rose only $6.9 million, of which $6.2 million came from the acquired gas-sensor business DD-Scientific. Electronic test and measurement sales declined from $76.8 million to $72.0 million. Over nine months, Instrumentation’s sales increased, but its operating profit fell from $293.1 million to $289.4 million because the mix of products sold became less profitable.
Aerospace and Defense Electronics also had a split result. Quarterly defense-electronics sales increased $16.5 million, while aerospace-electronics sales declined $4.6 million. The segment’s $7.4 million profit increase benefited substantially from a $5.8 million reduction in research and development expense. The filing attributes its higher margin primarily to that lower spending. Engineered Systems grew more steadily, with sales up 7.8% and operating profit up 6.6%.
Geography tells a similar story of uneven growth. For the first nine months, sales delivered to the United States increased from $2,352.1 million to $2,592.0 million, and European sales increased from $1,107.5 million to $1,251.8 million. Asian sales were nearly unchanged, at $666.4 million versus $668.8 million. Teledyne therefore has strong engines of growth, but the evidence does not show a broad recovery across every customer market.
Source: 2026 third-quarter Form 10-Q, Notes 3–4 and segment discussions, pp. 31–33.
3. Profit rose, with some help from estimates and refunds
The earnings improvement is supported by operations, but not every benefit has the same staying power. The quarterly increase in operating profit was $64.4 million. That accounts for most of the $73.0 million increase in profit before tax.
Two items outside operations need to be compared on the same basis. This quarter included a $10.6 million pretax gain from increasing the recorded value of Varex shares Teledyne already owned. The prior-year quarter included a $7.2 million pretax gain from buying back debt for less than its recorded amount. Both helped reported earnings without representing sales of Teledyne products. The Varex gain also remains in management’s adjusted earnings measure.
Taxes reduced some of the operating improvement reaching the bottom line. The quarterly effective tax rate rose from 19.3% to 21.3%, and separately identified tax benefits were smaller. Net income attributable to Teledyne still increased 23.6%. Diluted EPS increased faster, by 25.2%, partly because the average diluted share count declined from 47.5 million to 46.9 million. Using fewer shares magnifies the increase in earnings per share without adding to total company profit. The diluted share count includes potential shares from employee awards.
Source: 2026 third-quarter Form 10-Q, income statement, Notes 2, 8 and 11, and non-operating income discussion, pp. 27–29.
The nine-month accounts reveal another source of profit. Teledyne records approximately 40% of revenue as it performs work, often using costs incurred to estimate the portion of a contract completed. If managers revise the expected total cost or contract revenue, the current period records the effect on work already performed. Favorable revisions added $31.0 million to operating profit in the first nine months of 2026, compared with $8.6 million a year earlier, primarily in Digital Imaging.
The additional $22.4 million of favorable revisions equals about 14.5% of the company’s $154.3 million nine-month operating-profit increase. These revisions are part of normal contract accounting, but they are not a separate stream of new orders. Future profit depends on actual contract performance matching the estimates.
Tariff refunds also helped Digital Imaging’s nine-month margin, mainly through amounts recorded in the second quarter. Teledyne had received substantially all of the refunds it sought by the end of the third quarter. The filing does not quantify their profit contribution, so the evidence supports a refund benefit without supporting an exact profit figure excluding it. Current tariffs, pricing actions and material costs will determine the margin after those recoveries pass.
Source: 2026 third-quarter Form 10-Q, Note 4, p. 14; operating trends, p. 25; Digital Imaging, p. 30. The second-quarter 2026 Form 10-Q, Digital Imaging discussion, also identifies tariff refunds and higher inventory reserves without a complete numerical bridge.
Management’s adjusted quarterly net income rose from $264.5 million to $315.1 million, or 19.1%. It mainly removes the accounting expense that spreads the cost of acquired technology and customer relationships over their useful lives. The reconciliation is in the notes below. It confirms that the direction of improvement survives management’s adjustments, while still retaining the Varex gain, contract-estimate effects and any tariff effects in the period. Adjusted profit therefore should not be treated as a fully recurring earnings forecast.
Source: October 21 earnings release, GAAP-to-non-GAAP reconciliation, pp. 10–11.
4. Inventory purchases held back cash growth
Cash generation improved, but more money was tied up in components and unfinished products. Nine-month operating cash flow rose 11.0% to $901.7 million. That increase was slower than net income growth, largely because the company spent more building inventory.
Inventory purchases and related movements absorbed $193.7 million of operating cash, compared with $59.5 million a year earlier. On the balance sheet, inventory rose 17.0% from year-end to $1,220.3 million. Almost 96% of that increase came from raw materials and work in process. Cash is therefore being committed before these products are finished and delivered. The filing does not allocate the buildup between production for higher demand and protection against supply shortages.
| Cash generation; USD millions | Third quarter 2025 | Third quarter 2026 | First nine months 2025 | First nine months 2026 |
|---|---|---|---|---|
| Operating cash inflow | 343.1 | 352.5 | 812.3 | 901.7 |
| Purchases of property, plant and equipment | 29.2 | 33.0 | 77.5 | 93.2 |
| Free cash flow: operating cash less those purchases | 313.9 | 319.5 | 734.8 | 808.5 |
Sources: 2026 third-quarter Form 10-Q, cash-flow statement, p. 7, and Note 6, p. 16; October 21 earnings release, quarterly cash-flow discussion, p. 3. Capital spending is shown as a positive use of cash. Free cash flow is a non-GAAP calculation and excludes acquisition spending.
Customer and supplier timing partly supported cash. Billed receivables fell from $992.4 million to $938.3 million, but work already recorded as revenue and not yet billed rose from $374.6 million to $446.3 million. Taken together, these balances increased $17.6 million. The cash-flow statement reports $30.3 million of cash tied up in receivables during the period. It excludes receivables acquired with new businesses; changes in currency translation also prevent a simple subtraction of balance-sheet amounts from reproducing cash flow.
Customers also paid more ahead of Teledyne completing its work. These advance-payment obligations rose from $403.2 million to $480.0 million. Supplier bills outstanding increased from $486.6 million to $520.4 million. Those balances help finance production temporarily, but Teledyne still has to deliver the products and pay its suppliers.
Sources: 2026 third-quarter Form 10-Q, balance sheet and cash-flow statement, pp. 4 and 7; Note 4, contract liabilities, p. 14.
Lower tax payments were another reason operating cash improved. Management estimates that accelerated tax deductions under the 2025 tax law will reduce 2026 cash taxes by $60–70 million, compared with an approximately $30 million effect in 2025. The 2026 figure is a full-year estimate, not an additional amount to add to reported cash flow. It helps fund current spending but does not establish a permanent increase in annual profit.
The quarterly comparison makes the inventory issue especially clear: free cash flow rose only 1.8%, despite much stronger profit growth. Teledyne’s operations still funded substantial cash needs, but turning the growing order book and inventory into deliveries and collections is now central to further improvement.
Source: 2026 third-quarter Form 10-Q, income-tax discussion, p. 29, and liquidity discussion, p. 34; October 21 earnings release, p. 3.
5. Debt repayment created room for the next acquisition
Teledyne reduced financing debt and increased cash while continuing to invest. It repaid $450 million of notes that matured in April. By September 27, reported debt was $2,027.8 million and cash was $562.4 million. Debt less cash fell from $2,123.0 million at year-end to $1,465.4 million.
The nine-month $808.5 million of free cash flow covered $53.4 million of acquisition payments, $450.9 million of debt repayments and $97.7 million of treasury-share purchases including excise tax. After other investing and financing flows and currency effects, cash increased $210.0 million. The detailed reconciliation below distinguishes cash paid from the amounts recorded in shareholders’ equity.
This year also had a much lighter completed-acquisition bill than the first nine months of 2025, when acquisition payments were $764.2 million. That difference helped Teledyne rebuild cash. DD-Scientific, acquired in January 2026, adds gas sensors for industrial safety, healthcare and environmental applications; the much larger Varex payment remains ahead.
Source: 2026 third-quarter Form 10-Q, cash-flow statement, Note 2, Note 7 and liquidity discussion.
Investment in existing operations is also rising. Management plans approximately $140 million of 2026 capital spending to upgrade facilities and manufacturing equipment and support internal growth. Spending through September was $93.2 million, leaving approximately $46.8 million to reach that plan. Net property, plant and equipment remained nearly level, at $840.5 million versus $839.1 million at year-end. That balance reflects assets being added while existing assets are depreciated; it does not identify a maintenance-versus-expansion split. Nine-month research and development expense also increased, from $240.1 million to $253.4 million, with more spending on FLIR product development.
Source: 2026 third-quarter Form 10-Q, balance sheet, income statement and management’s discussion, pp. 26, 28, 30 and 34.
The next large scheduled note maturity is in April 2028. The remaining notes charge fixed interest, while bank borrowing for Varex would carry an interest rate that can change. Lower outstanding borrowings have already helped: nine-month interest expense after interest income fell from $47.5 million to $36.4 million.
| Financing at September 27, 2026; USD millions | Amount outstanding before separately reported debt costs | Maturity | Contractual annual coupon |
|---|---|---|---|
| Fixed-rate notes | 700.0 | April 2028 | 2.25% |
| Fixed-rate notes | 427.3 | August 2030 | 2.50% |
| Fixed-rate notes | 910.8 | April 2031 | 2.75% |
| Revolving credit facility | 0.0 | June 2029 | Floating reference rate plus applicable spread |
Source: 2026 third-quarter Form 10-Q, Note 7, p. 17; June 2024 credit agreement, applicable-rate definitions and interest provisions. Other debt was $0.8 million; unamortized discounts and issuance costs reduced reported debt by $11.1 million. The three note balances imply approximately $51.5 million of annual coupon interest before other debt, fees, hedging effects, interest income or future borrowing.
Cash plus unused bank capacity totaled $1,720.8 million at quarter-end. Bank capacity was $1,158.4 million after allowing for letters of credit. Teledyne reported compliance with its borrowing conditions and substantial room within them. This supports management’s plan to finance Varex with existing cash and bank borrowings, although the approximately $1.1 billion announced transaction value includes Varex’s net debt and equity awards and is not an exact closing-day cash requirement.
Buybacks use some of the same capacity. Teledyne bought 157,106 shares for $94.8 million during the quarter, and its 10-Q disclosed another approximately $139 million of repurchases after quarter-end. Management described the purchases as opportunistic and says the pace depends on available cash, acquisitions and other uses of capital. These purchases are discretionary; the remaining authorization is not a payment obligation. The September cash balance precedes the later purchases.
Sources: 2026 third-quarter Form 10-Q, Notes 2, 7 and 11, liquidity discussion, and Part II, Item 2; October 21 earnings release, management commentary. The release’s $224.6 million total through October 19 uses an earlier cutoff than the subsequent-repurchase disclosure in the 10-Q.
6. Varex expands the product range, but brings a cash-generation challenge
Varex would add complementary X-ray products, while making customer retention and cash management more demanding. Teledyne says the combination would add X-ray tubes, detectors suitable for high-radiation oncology uses and photon-counting detectors. These products broaden what it can sell to medical-equipment manufacturers and industrial inspection customers alongside its existing detectors and related electronics.
The strategic purpose is to offer more components to similar customers and support development of more advanced imaging products. That is a plausible route to additional sales, but no quantified revenue or cost synergy is established in the acquisition announcement. Completion was expected in early 2027, subject to shareholder and regulatory approvals. Varex is not included in Teledyne’s September results.
Source: Teledyne and Varex acquisition announcement, August 10, 2026; 2026 third-quarter Form 10-Q, Note 2.
Varex’s own latest reported quarter ended July 3, earlier than Teledyne’s quarter. It shows a mixed business. Industrial sales increased from $60.9 million to $76.5 million, helped by inspection products and detectors. Medical sales declined from $142.1 million to $134.0 million. The medical figure included a $5.3 million reduction for expected refunds to customers of tariff charges previously billed to them, so the reported decline is not wholly a decline in product demand.
Tariff recoveries also materially improved Varex’s profit. It reported $22.8 million of operating profit. Refunds reduced production costs by $16.7 million, while expected customer reimbursements reduced sales by $6.6 million, giving a net $10.1 million operating-profit benefit. That net benefit accounted for a calculated 44% of operating profit. Much of the quarter’s profit therefore came from recovering costs paid in earlier periods.
Source: Varex Form 10-Q for the quarter ended July 3, 2026, consolidated income statement, p. 2, and management’s discussion, “IEEPA Tariffs and Refunds” and quarterly results, pp. 31–36. The $0.7 million of associated interest income is outside operating profit and is not included in the $10.1 million adjustment.
Varex generated just $3.4 million of operating cash over its first nine months, versus $33.8 million in the prior comparison period. The latest period included $17.7 million of tariff refunds and related interest received; excluding those receipts would leave approximately $14.3 million of cash used. Varex identified higher inventory purchases and slower collection timing among the pressures. Its 2026 cumulative period had 39 weeks versus 40 weeks in 2025, which limits a precise growth comparison but does not change the importance of the refund receipts to current cash generation.
Customer relationships are another condition for success. Canon Medical Systems represented 15.3% of Varex’s latest quarterly revenue. Varex also warns that some equipment manufacturers buying its components make competing components themselves, and that it has lost sales when customers increased internal production. A broader product range can help Teledyne serve these customers, but it will still have to earn orders through performance, price and reliable delivery.
Source: Varex July 2026 Form 10-Q, Note 1, customer concentration; fiscal-period discussion, p. 34; cash flows, pp. 40–41; and customer and competition risks, p. 48.
An October 22 filing adds a specific closing risk. Varex disclosed two shareholder lawsuits and 13 demand letters alleging deficiencies in the merger disclosures. Some requested an order preventing completion until additional information was supplied. Varex disputed the claims and issued supplemental disclosures to reduce the risk of delay; it said the October 28 shareholder meeting and merger consideration were unchanged. No loss estimate was provided. The business case therefore rests on completing the transaction, keeping customers and improving the acquired operation’s cash generation.
Source: Varex supplemental merger disclosures, October 22, 2026, Item 8.01, “Litigation Relating to the Merger,” pp. 1–2.
7. FLIR’s last asset review left a limited cushion
Stronger imaging results help, but FLIR’s recorded acquisition values remain sensitive to future performance. Goodwill and acquired intangible assets totaled $10,605.9 million, or 68.1% of Teledyne’s assets. These balances represent amounts paid for acquired businesses and identifiable assets such as technology, customer relationships and trademarks. They are not funds available to pay debt or finance Varex.
Goodwill declined slightly to $8,678.5 million. New goodwill of $39.1 million from DD-Scientific was more than offset by $48.2 million of currency changes and other movements. Acquired intangible assets fell from $2,100.1 million to $1,927.4 million, with $168.8 million of amortization accounting for most of the decline. These changes explain why substantial cash investment can coexist with lower recorded acquisition assets.
The more important issue is FLIR’s cushion against an accounting write-down. At the 2025 annual assessment, FLIR’s estimated business value exceeded its recorded amount by approximately 8%. Its trademark had only about a 3% cushion. Teledyne had already recorded a $49.5 million FLIR trademark impairment in 2024. The 2026 third-quarter filing found no event requiring an interim impairment test and scheduled the normal annual review for the fourth quarter.
Digital Imaging’s improvement is favorable evidence, but the segment includes businesses beyond FLIR. It does not establish how much FLIR’s own cushion has changed. If FLIR’s expected sales or profits disappoint, a write-down could reduce reported earnings and equity without itself causing a new cash payment.
Sources: 2026 third-quarter Form 10-Q, Note 5, p. 15; 2025 Form 10-K, critical accounting estimates, pp. 35–37.
Trade compliance can affect the ability to make sales as well as the cost of fines. Teledyne FLIR reached a settlement in February 2026 over historical export-control allegations and subsequently paid a $1 million civil penalty. Other voluntary disclosures remain described in the filing, which warns that adverse outcomes could include substantial penalties or restrictions on export privileges. The filing does not provide a quantified reasonably possible loss range for those unresolved matters.
Supply restrictions are also operationally relevant. Teledyne uses certain rare-earth materials affected by Chinese export restrictions. Management is using its international manufacturing network, cost controls, pricing actions and supplier work to limit disruption. Those measures support deliveries, but higher material costs or missing components could still delay the conversion of orders into revenue. This is a more direct business risk than the small environmental reserve, which was $5.6 million and is expected to be spent over many years.
Source: 2026 third-quarter Form 10-Q, Note 15, p. 24, and operating trends, p. 25. Management did not expect identified pending government-contract investigations or other litigation to materially harm financial condition, while acknowledging that a resolution could materially affect a particular period’s results.
8. Imaging execution and Varex integration will decide the next stage
Teledyne enters its next acquisition with stronger operations and more funding flexibility. Imaging sales and product mix have lifted profitability, firm orders support further production, and cash generation has allowed debt repayment alongside investment. The main operating weaknesses are identifiable: electronic testing remains soft, aerospace sales declined, and more cash is being committed to inventory.
Management raised its full-year 2026 GAAP diluted-EPS forecast to $21.71–$21.87, from $20.73–$20.99, and forecast $5.68–$5.83 for the fourth quarter. These are management expectations, not reported results. Since Varex was expected to close in early 2027, the immediate task is to execute the existing order book and complete planned facility and equipment spending.
Source: October 21 earnings release, highlights and outlook, pp. 1 and 4; 2026 third-quarter Form 10-Q, Note 2 and capital-spending discussion.
The supported business assessment is positive on current operating progress and more demanding on the next stage of growth. Varex can broaden Teledyne’s medical and industrial offering, but its recent cash results show that ownership alone will not deliver the intended benefits. The assessment would strengthen if rising deliveries release cash from inventory and Varex retains customers while improving cash generation. It would weaken if production delays keep money tied up, favorable contract estimates reverse, or acquisition integration consumes more cash than the expanded business produces.
Reporting basis and calculation notes
Reporting basis: Teledyne Technologies Incorporated, NYSE: TDY, CIK 0001094285. The selected filing is Form 10-Q, accession 0001094285-26-000059, filed October 23, 2026. It contains unaudited consolidated accounts prepared under U.S. generally accepted accounting principles (GAAP), including subsidiaries. The quarter runs June 29–September 27, 2026, compared with June 30–September 28, 2025. The nine-month periods begin December 29, 2025 and December 30, 2024, respectively. Balance-sheet comparisons use December 28, 2025. Amounts are USD millions unless otherwise labeled. The cash-flow reconciliation uses cash and cash equivalents; the statement does not add a separately reported restricted-cash balance.
Sources: SEC filing metadata; selected 10-Q, cover, financial statements and Note 1. Relevant SEC company facts were checked using the selected accession, actual start/end dates, consolidated scope and USD, shares or USD-per-share units, rather than relying on fiscal labels alone.
Reporting basis: Research was bounded by October 24, 2026, New York date. The analysis uses Teledyne’s October 23 filing, its October 21 earnings release, Varex’s October 22 supplement and the dated primary sources cited beside each finding. It does not assert that every development through October 24 was independently verified. Varex’s July financial period is kept separate from Teledyne’s September period and is not added to Teledyne’s accounts.
Calculation notes: Growth means the current amount divided by the comparable earlier amount, minus one. Operating margin means operating profit divided by sales. A change between two margins is expressed in percentage points. The third-quarter historical check uses sales/operating profit of $1,402.5/$264.3 million in 2023, $1,443.5/$270.7 million in 2024, $1,539.5/$282.8 million in 2025 and $1,684.9/$347.2 million in 2026. Rounding can make small calculated differences differ from subtraction of displayed percentages.
Source: SEC company facts, consolidated quarterly sales and operating income, including accessions 0001094285-23-000129, 0001094285-24-000104, 0001094285-25-000140 and the selected filing.
Calculation notes: Management’s adjusted quarterly profit removes the following items. “After tax” is the disclosed effect on net income attributable to Teledyne; it is not estimated using one assumed tax rate.
| Reconciliation; USD millions | Third-quarter 2025 pretax profit | Third-quarter 2025 after-tax profit | Third-quarter 2026 pretax profit | Third-quarter 2026 after-tax profit |
|---|---|---|---|---|
| Reported GAAP amount | 273.8 | 220.7 | 346.8 | 272.8 |
| Add back transaction and integration costs | 0.7 | 0.6 | 0.2 | 0.1 |
| Add back acquired-inventory accounting expense | 1.4 | 1.0 | 0.0 | 0.0 |
| Add back acquired-intangible amortization | 55.1 | 42.0 | 55.2 | 42.2 |
| Remove FLIR acquisition-related tax expense | 0.0 | 0.2 | 0.0 | 0.0 |
| Management’s non-GAAP amount | 331.0 | 264.5 | 402.2 | 315.1 |
Source: October 21 earnings release, reconciliation, p. 10. Adjusted diluted EPS was $5.57 in 2025 and $6.72 in 2026. The acquired-inventory adjustment removes the extra expense created when purchased inventory was initially recorded at acquisition-date value. Amortization reflects the use of acquired assets and can remain substantial for years.
Calculation notes: The bridge from profit to operating cash shows why the two measures differ. Positive amounts increase cash relative to reported profit; negative amounts reduce it.
| Profit-to-cash bridge; USD millions | First nine months 2025 | First nine months 2026 |
|---|---|---|
| Profit including minority owners’ share in subsidiaries | 620.1 | 751.3 |
| Add depreciation and amortization, without a current cash payment | 251.7 | 257.6 |
| Add stock compensation, without a current cash payment | 30.7 | 31.7 |
| Remove gain from revaluing equity securities | 0.0 | -10.6 |
| Receivables: sales recorded ahead of cash collection, net | -12.8 | -30.3 |
| Inventory movements | -59.5 | -193.7 |
| Supplier-payment timing | 13.9 | 42.6 |
| Deferred taxes and income-tax balances, net | -74.2 | 4.1 |
| Prepaid expenses and other assets | -50.4 | -48.8 |
| Accrued expenses and other liabilities | 48.0 | 90.3 |
| Other operating adjustments | 44.8 | 7.5 |
| Operating cash flow | 812.3 | 901.7 |
Source: 2026 third-quarter Form 10-Q, p. 7. Operating-balance changes exclude acquired businesses. The tax line combines accounting adjustments and payment timing; it is not a separate cash-tax saving to add to management’s tax-law estimate.
Calculation notes: The cash allocation below starts after spending on property, plant and equipment. It shows how the remaining cash funded acquisitions and financing decisions. No cash dividend appears in the statement.
| Cash allocation; USD millions | First nine months 2026 |
|---|---|
| Free cash flow after capital spending | 808.5 |
| Business acquisitions, net of cash acquired | -53.4 |
| Debt repayments | -450.9 |
| Share repurchases and excise tax | -97.7 |
| Other investing outflow | -13.8 |
| Cash received from option exercises | 36.1 |
| Other financing outflow | -15.3 |
| Currency effects on cash | -3.5 |
| Increase in cash | 210.0 |
| Add opening cash | 352.4 |
| Closing cash | 562.4 |
Calculation notes: The full statement also reconciles: $352.4 million opening cash plus $901.7 million operating inflow, less $160.4 million investing outflow, $527.8 million financing outflow and $3.5 million currency effects equals $562.4 million closing cash.
Source: 2026 third-quarter Form 10-Q, cash-flow statement, p. 7.
Calculation notes: Both balance sheets balance. September assets of $15,565.0 million equal liabilities of $4,429.6 million plus equity of $11,135.4 million. December assets of $15,285.3 million equal liabilities of $4,771.4 million plus equity of $10,513.9 million. Liabilities declined mainly because the April notes were repaid, partly offset by larger supplier bills and accrued obligations.
| Equity reconciliation; USD millions | December 28, 2025 | September 27, 2026 | Change |
|---|---|---|---|
| Common stock | 0.5 | 0.5 | 0.0 |
| Capital from share issues and compensation | 4,383.2 | 4,360.7 | -22.5 |
| Profits retained in the business | 7,140.8 | 7,892.1 | 751.3 |
| Treasury shares, recorded as a deduction | -585.2 | -606.2 | -21.0 |
| Accumulated gains and losses outside net income | -425.4 | -511.7 | -86.3 |
| Total equity | 10,513.9 | 11,135.4 | 621.5 |
Calculation notes: Retained earnings—the profits kept in the business—increased by net income. Additional paid-in capital records share-related capital entries. It increased by $36.1 million from option exercises and $18.1 million from the statement’s “stock-based compensation and other” entries. A $76.7 million transfer for previously repurchased shares reissued to holders reduced that capital account, leaving a net decline of $22.5 million.
Calculation notes: The treasury-share deduction shrank by $76.7 million when shares were reissued. New repurchases of $94.8 million and excise tax of $2.9 million enlarged it, producing the net $21.0 million increase in the deduction. These capital movements differ from the $31.7 million expense for stock compensation. Separately, translating foreign operations into dollars reduced equity by $92.9 million, partly offset by pension-related movements. Those translation entries do not pass through operating profit.
Sources: 2026 third-quarter Form 10-Q, balance sheet, equity statement and Note 12, pp. 4–5 and 20–21. Outstanding shares increased from 46,185,578 at year-end to 46,217,345 at September 27, despite repurchases, because equity awards and option exercises also affected shares in circulation. Issued shares and treasury shares are separate measures; purchases held in treasury should not be described as retired shares. The quarterly weighted-average diluted share count can decline year over year while the period-end count rises slightly from December.
Reporting basis: Operating leases are payment obligations separate from financing debt. The latest full schedule, dated December 28, 2025, showed $199.7 million of undiscounted remaining lease payments, including $40.9 million scheduled for 2026 and $37.2 million for 2027. The recorded liability was $166.7 million after discounting future payments. These are year-end figures, not a refreshed September schedule. Finance leases were immaterial. The same annual report listed $391.0 million of purchase obligations, mostly due in 2026; the quarterly filing does not provide a replacement maturity schedule.
Source: 2025 Form 10-K, contractual obligations, p. 31, and Note 16, pp. 84–85.
Reporting basis: The bank agreement generally caps debt less specified eligible cash at 3.5 times its defined annual earnings measure, with a temporary 4.0-times allowance following a qualifying acquisition. It also requires that measure to cover defined interest charges at least three times. The bank’s earnings measure adds back interest, taxes, the accounting expense for using long-lived assets, and specified other costs. It also adjusts for acquisitions. Only qualifying cash can reduce debt in this test, so subtracting all company cash would not reproduce it. Teledyne reported compliance at September 27.
Sources: June 2024 credit agreement, definitions of Consolidated EBITDA, Consolidated Net Debt to EBITDA Ratio and Consolidated Interest Coverage Ratio, and Section 8.09; 2026 third-quarter Form 10-Q, Note 7 and p. 34.
Reporting basis: The annual tax disclosures recorded $79.6 million of uncertain tax benefits and $11.4 million of related interest and penalties at December 28, 2025. These reflect tax positions whose ultimate treatment remains uncertain. The annual report did not treat the full amount as a scheduled cash payment because of offsets and uncertain settlement timing. The selected 10-Q provides no updated full rollforward, so these amounts are historical context rather than September cash claims.
Source: 2025 Form 10-K, contractual-obligation exclusions and Note 9, income taxes.
This analysis is for general information and business understanding. It is not investment advice or a recommendation to transact in any security.