Oct 21, 2026 earnings call — Record Q3, digital imaging strength and Varex acquisition
Company raised full year 2026 sales outlook to $6.625 billion and non GAAP earnings to $25.45 per share.
Revenue $1.7B (est $1.7B) · EPS $6.72 (est $6.17)
Key quotes
"In the Digital Imaging segment, third quarter sales increased 14.3% organically, due to well balanced growth among our defense and commercial businesses."
"For all of Teledyne, orders have exceeded sales for 12 consecutive quarters and funded backlog is now $5.3 billion."
"We continue to anticipate closing early in 2027."
Analyst Q&A 11
backlog and revenue outlook for 2027
Q (Zachary Walljasper · UBS): He asked how the awards being won now translate to top-line visibility into 2027. He also asked whether the timing issue in instrumentation orders was just for test and measurement or for the whole segment.
A: Management said backlog stands at $5.3 billion and about 72% of that is available to recognize as revenue in the next 12 months. They said that ratio is about half of 2026 revenue, book-to-bill for instruments is 1.07x, and the Q3 pickup points to a favorable future.
"As we mentioned, the backlog right now stands at $5.3 billion." — Robert Mehrabian (CHAIR)
why digital imaging accelerated and margins
Q (Andrew Buscaglia · BNP Paribas): He asked what changed intra-quarter to beat expectations in digital imaging and whether defense or commercial drove it. He also asked about digital imaging gross margin outlook and rising R&D/SG&A.
A: Management said digital imaging strength was broad based: space (infrared sensors and missile warning/tracking), unmanned systems, and commercial machine vision and healthcare all picked up. They reported a digital imaging book-to-bill of about 1.22x and said margins are expected to improve about 225 basis points for the year, with ongoing cost and margin work underway.
"And digital imaging book to bill as a whole, both what we call our legacy and FLIR, had a book to bill of about 1.22x." — Robert Mehrabian (CHAIR)
instrumentation margins and unmanned demand
Q (Adam Samuelson · Jefferies): He asked if instrumentation margins will return to year-on-year expansion in Q4 and into 2027. He also asked how demand for infrared subsystems breaks down between Teledyne platforms and third-party platforms and whether capacity is available.
A: They said instrumentation should see sequential margin improvement but Q4 likely will not fully reach 2025 margins; they feel good about the direction for 2027. On unmanned, subsystems have been the strongest defense programs, supplying both Teledyne and other platforms, with substantial year-over-year growth and product upgrades (moving from 12-micron to 8-micron detectors); bigger systems are expected to grow about 10% while subsystems should grow by a multiple of that.
"I think that we continue to see sequential margin improvement as we go through the year." — George C. Bobb (CEO)
budget risk and why Teledyne bought Varex
Q (Jonathan Siegmann · Stifel): He asked what impact a stall in reconciliation funding would have and what prime customers are saying about growth. He also asked why Teledyne pursued Varex and thoughts on its revenue declines and potential.
A: They said there is budget uncertainty but their longer-term programs, including a recent award, support 2027 and they do not see an issue this year, though 2028–2029 is unclear. On Varex, they bought it because its oncology X-ray detectors and photon detectors complement Teledyne’s healthcare products; revenue has been flat but they expect to improve margins through 80/20 actions and removing public-company costs.
"And that is very attractive to us because we have always wanted to get into that field, they are already in it and advanced in it." — Robert Mehrabian (CHAIR)
2027 revenue outlook and tariff refunds
Q (Guy Hardwick · Barclays): He asked for an early read on 2027 revenue growth excluding Varex and whether digital imaging margins benefited from tariff reversals or refunds.
A: They said refunds were taken in Q2 and did not affect Q3. On 2027 it is too early to give firm guidance, but management said momentum exists and they expect to improve next year, though they would not project the exact level yet.
"No. The refunds were really taken up in Q2." — Robert Mehrabian (CHAIR)
order patterns and Varex integration
Q (Joe Giordano · TD Cowen): He asked if customers are ordering earlier or excessively because of budget worries and whether any part of the orders looked abnormal. He also asked how Teledyne will drive growth at Varex and how the go-to-market will be organized.
A: They said they have not seen unusual ordering patterns and orders are broad-based across products. For Varex they will apply 80/20 SKU rationalization which may reduce revenue initially while improving margins, then return to mid-single-digit growth, and sales will be a unified “one face” Teledyne approach rather than separate teams.
"The backlog, the orders are kind of broad-based the orders are broad based across our products." — Robert Mehrabian (CHAIR)
supply chain and component shortages
Q (Jordan Lyonnais · BofA): He asked how supply chain shortages (PCBs, components) and AI/hyperscaler demand are affecting production and how Teledyne manages shortages.
A: They said shortages exist but a dedicated team works with businesses to secure needed parts. Inflation for parts is higher than normal, but they have implemented price increases and are planning aggressively with suppliers to manage shortages.
"We have a dedicated team that works with our businesses that ensures that we get what we need to produce our products" — Robert Mehrabian (CHAIR)
sustainability of digital imaging growth and Q4 guide
Q (Noah Poponak · Goldman Sachs): He asked if the recent high growth in digital imaging is sustainable given unique defense demand and improving commercial recovery. He also asked about longer-term margin potential and the implied Q4 organic revenue growth in the revised guidance.
A: They said short term (into 2027) they expect to do better than historical low single digits and foresee mid to higher single-digit growth, though they will not predict far beyond the year. For margins they target at least 50 basis points of improvement per year, and for Q4 they currently have 7% to 8% organic growth in mind.
"I think 7% to 8% is the number we have in mind at the present time." — Robert Mehrabian (CHAIR)
Q4 caution factors and unmanned growth rate
Q (Robert Jamieson · Needham and Company): He asked what is embedded in the cautious Q4 outlook and any macro puts and takes. He also asked how much dollar growth unmanned is generating this year.
A: They said part of the caution is that tax benefits seen in late 2025 are not being enjoyed today and they are working to secure tax credits; disciplined cost decisions also shape EPS. For unmanned they said growth is broadly about 15% year over year from 2025 to 2026, and the larger set of space/electronic warfare/missiles/underwater is up double digits at about 11.3%–11.5%.
"Broadly, 15%. Year over year, 2025 to 2026. just for unmanned." — Robert Mehrabian (CHAIR)
long-term digital imaging growth outlook
Q (Bradley Eyster · Citi): He asked what the size and shape of digital imaging could look like over time given early-stage programs like space sensors and missile detection. He wanted color on multi-year growth potential.
A: They said they are targeting mid single digits and maybe a little higher, giving a 5% to 8% range as a comfortable outlook, but they will not project beyond the next year. They cited new product competition and capabilities (for example loitering and nano drones working together) as drivers that support higher single-digit growth if execution continues.
"Let me just say right now, from where we sit, George and I, we are looking at mid single digits maybe a little higher than that 5% to 8%." — Robert Mehrabian (CHAIR)
digital imaging full-year organic growth clarification
Q (Joe Giordano · TD Cowen): He asked to clarify whether the 8-something percent figure for digital imaging was a Q4 number or a full-year number.
A: They clarified the full-year organic growth for digital imaging is about 10%, plus 0.6% from an acquisition, for a total near 10.6% (closer to 11%). They also noted digital imaging revenue is around $2.5 billion, which makes the full-year percentage consistent.
"The organic is 10%, with 0.6 of acquisition, it is 10.6%, closer to 11%." — Robert Mehrabian (CHAIR)