Geo Week News

July 30, 2013

Teledyne's digital imaging business posts 6% drop in Q2 sales


CEO Mehrabian: Optech ‘not easiest business to control’

Teledyne Technologies Inc. reported second quarter revenue in its digital imaging business was down 6 percent to $104.3 million, primarily due to lower sales of imagers for remote sensing, lidar systems and MEMS (microelectromechanical) products.

“Digital imaging comps have been tough over the past year,” Teledyne CEO Robert Mehrabian said in a conference call with analysts last week, pointing out, however, the segment hit its highest revenue in the past three quarters.

Teledyne’s digital imaging segment includes 3D data capture products such as sensors, cameras and software for the industrial, scientific, medical and professional industries. The segment also includes a portfolio of lidar systems for airborne terrestrial mapping, mobile mapping and laser-based 3D imaging applications manufactured by Ontario-based Optech Inc., which Teledyne paid $28 million for a majority interest last year.

In a conference call with analysts last week to discuss second quarter results, Teledyne CEO Robert Mehrabian said Optech had some growth from the first to second quarter, about $9.3 million to $11.5 million, up approximately 24 percent. Optech had sales of almost $55 million for its FY2012.

Mehrabian said Optech had during the quarter ended June 30 “some delays in their market, especially in survey-grade mapping and some of their laser-based terrestrial imaging, airborne laser and terrain mapping products.”

While the digital imaging segment’s second quarter operating profit was up 5.3 percent to $7.9 million for the second quarter, thanks to improved profitability for lidar systems, Mehrabian expressed some frustration with his ability to manage the Optech business.

“Fundamentally, we really own only 51 percent of Optech, 49 percent is minority-owned,” he said. “It’s not the easiest business for us to control because, while we are majority shareholders, there is a very strong, minority component [at Optech].” A request for comment from Optech was not immediately returned. Mehrabian did credit Optech management for recently cutting its workforce “to bring their cost structure lower.”

VIDEO: Listen to Optech President Max Elbaz discuss the company’s product line at Intergeo 2012 in Hanover, Germany.

The drop in second quarter sales for the digital imaging segment was partially offset by increased sales of infrared sensors and optics, the company said.

The digital imaging segment’s first quarter 2013 sales were $102.4 million, an increase of 8.7 percent. Operating profit was $5.2 million for the first quarter of 2013, an increase of 21 percent.
Operating profit in 2013 reflected the impact of higher sales, partially offset by an operating loss of $1.4 million at Optech.

Teledyne’s digital imaging business posted $415.9 million in sales for 2012, a 19 percent increase, while operating profit for the business was $24.8 million in 2012, up 54 percent.

Mehrabian said all three of Teledyne’s business segments will have “modest growth” in 2013, with digital imaging expected to improve from a 7.5 percent margin to 8 percent in the next couple of quarters.

Teledyne, based in Thousand Oaks, Calif., also operates an Aerospace and Defense Electronics segment and Engineered Systems business to serve markets including deepwater oil and gas exploration and production, oceanographic research, air and water quality environmental monitoring, electronics design and development, factory automation and medical imaging.

Regarding Teledyne’s M&A pipeline, Mehrabian said he sees opportunities in acquiring some smaller businesses but said “they are expensive because everyone is effervescent about the market.”

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