On February 24th – Teledyne Technologies Inc published it’s latest 10-K with the SEC which includes reporting on its digital imaging business segment. These results show that sales revenue continued to grow strongly during the quarter. Net sales revenue from digital imaging reached $268.1 million during Q4 2019, compared with $223.3 million in Q4 2018, an increase of approximately +20% year-on-year. This propelled full-year cumulative sales revenue to $992.9 million, compared with $875.3 million in 2018, an increase of approximately +13% year-on-year.
The digital imaging segment
The company has four reportable segments: Instrumentation; Digital Imaging; Aerospace and Defense Electronics; and Engineered Systems. The Digital Imaging segment contributed approximately 30% of total company revenues during 2019 and encompasses a portfolio of digital imaging products for use in industrial, government and medical applications. This includes sensors, cameras and systems, within the visible, infrared and X-ray spectra, such as it’s series of CMOS based X-ray detectors. The segment also includes its semiconductor business, analogue-to-digital converters as well as micro-electro-mechanical systems (“MEMS”). The digital imaging segment has principal operations in the United States, Canada, France, the Netherlands and the United Kingdom.
Sales growth led by acquisitions
The sales growth during 2019 is the continuation of a longer-term growth trend for the Digital Imaging segment which has delivered a sales CAGR of 27.2% between FY15 and FY19. This sales growth has been predominately driven by acquisitions, notably e2V, Roper Technologies and Micralyne.
On March 28th 2017, the company completed the acquisition of e2v Technologies PLC for $770.7 million. Teledyne funded the acquisition with borrowings under its credit facility and cash on hand as well as $100 million in a newly issued term loan. The e2v business provides high-performance semiconductors, image sensors, custom camera solutions as well as components and subsystems that deliver high-reliability radio frequency power generation for healthcare, industrial and defence applications. This includes power generation for medical radiotherapy equipment. This acquisition builds upon Teledynes existing capabilities within the development and manufacture of X-ray detectors for medical and life science applications. The combined Teledyne e2v business now offers a range of CCD and CMOS image sensor solutions and services geared toward optical tomography and dental X-ray as well as X-ray for minimally invasive surgical procedures. Principally located in Chelmsford, United Kingdom and Grenoble, France, e2v had sales of approximately £236 million for its fiscal year ended March 31, 2016. e2v’s results have been included since the date of the acquisition and include $274.2 million in net sales and operating income of $37.3 million, which included $8.3 million in acquisition-related costs and $11.2 million in additional intangible asset amortization expense for 2017.
On February 5th 2019, the company acquired the scientific imaging business of Roper Technologies for $224.8 million in cash. The acquired businesses included Princeton Instruments, Photometrics and Lumenera. These businesses are principally located within North America and now form part of the digital imaging segment. This group of companies provide a range of imaging solutions, primarily for life sciences, academic research and customized OEM imaging solutions. Princeton Instruments and Photometrics manufacture state-of-the-art cameras, spectrographs and optics for advanced research in physical sciences, life sciences research and spectroscopy imaging. Applications and markets include materials analysis, quantum technology and cell biology imaging using fluorescence and chemiluminescence. Lumenera primarily provides rugged USB-based customized cameras for markets such as traffic management, as well as life sciences applications.
On August 30th 2019, the company acquired Micralyne Inc for $25.7 million in cash. Micralyne is a foundry providing MEMS devices. Micralyne possesses unique microfluidic technology for biotech applications, as well as capabilities in non-silicon-based MEMS (e.g. gold, polymers) often required for human body compatibility. Based in Edmonton, Alberta, Canada, the acquired business is part of the digital imaging segment.
Sales results by geography and customer
From a geographical perspective, sales remained balanced between the United States, Europe and the rest of the world. Net sales revenue originating from the U.S. accounted for approximately 1/3 of revenues, of which 1/3 of U.S. originated revenues were generated from contracts with the U.S. government, mainly the U.S. Department of Defense.