Release Date: January 22, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Robert, you referenced 4% growth top line in the 2025 guidance. Is that 3% organic and a point from Micropac, or is that 4% organic? A: No, what I mentioned is, as you said, a little over 4%, 3.2% organic and about 1% through acquisitions. Acquisitions include Micropac, Noah, but they also include parts of Valeport and a part of Adimec. It does add up to about 1.1%, so 1% -- total is 4.2%.
Q: If Excelitas closes on schedule, can you talk about what that adds in revenue, EBITDA earnings to the year? A: Yes, I think it depends on when it closes, as you can appreciate. But I'm going to say about $15 million a month, Noah.
Q: Can you talk about the 3% -- or slightly over 3% organic assumption, especially in short cycle versus long cycle businesses? A: On an organic growth basis, our target is about 3.2%. Instruments are expected to grow with a combined organic growth of 3.8%. Digital Imaging is expected to grow just under 3%, maybe 2.8%. Aerospace and Defense is targeting 4%, which will jump to 8% with Micropac. Engineered Systems is assumed to grow about 2.3% organically.
Q: On the Digital Imaging outlook, how are you thinking about vision, FLIR defense, and healthcare recovery? A: In '24 over '23, FLIR increased in almost all areas, with defense growing about 9%. For '25, FLIR is expected to increase about 3.9%, with defense being very healthy. Traditional Digital Imaging is expected to grow modestly, around 3.1%, with some contribution from the Adimec acquisition.
Q: Can you level set the margin outlook and drivers for 2025? A: We finished the year at 22% and expect it to grow by 80 basis points. Digital Imaging is expected to get about 80 basis points growth. Instruments had strong margin growth, so we're being cautious with a 45 basis points increase. Aerospace and Defense margins might increase by 14-15 basis points due to the Micropac acquisition.
Q: With 2025, you're talking about 3.2% organic growth. Does that include FX, and how much short cycle recovery do you assume? A: Yes, we account for a 1.3% headwind from FX. Short-cycle businesses should grow modestly due to FX, with Test and Measurement and Environmental in the low single digits. FLIR will grow about 3.9%, mainly from Defense.
Q: On the Excelitas acquisition, should we assume some accretion to non-GAAP earnings in '25 once that's closed? A: Yes, if it closes, we expect about $15 million a month in revenue, with $0.15 to $0.20 of accretion for the full year.
Q: Can you give us a sense of the order trends and any areas that have picked up more meaningfully? A: Overall, book to bill for the company is about 1.04. Instruments have a book to bill of 1.12, led by Marine at 1.23. Digital Imaging's FLIR is positive at 1.03. Machine vision is recovering slowly, with order increases throughout the year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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