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24 Apr 2025
Industrial and defense technology firm expects some impact from market uncertainty and will take action to protect margins.
Teledyne Technologies, the industrial technology company that owns a number of imaging subsidiaries and recently acquired optical component maker Qioptiq, should be relatively unaffected by imposition of US import tariffs.
Revealing the California-headquartered firm’s latest quarterly financial results, long-time CEO Robert Mehrabian said that although Teledyne was not immune to the still-unfolding situation, the structure of the business means that the vast majority of its operations will avoid new and higher tariffs.
However, he also noted that the wider market uncertainty created by the US administration's on-off deliberations would likely have some negative impact on Teledyne’s 2025 sales, telling an investor call:
“We must assume that the market uncertainty will have some impact. While this is nearly impossible to quantify, we've assumed a negative sales impact of perhaps about one per cent of annual sales.”
That anticipated decline will be somewhat offset by the Qioptiq acquisition, meaning that the 2025 total is now expected to be close to $6 billion - up from the figure of $5.67 billion posted last year.
Marginal tariff impact
While Teledyne has manufacturing operations across several countries outside the US, including a number of European locations, Mehrabian pointed out that approximately 80 per cent of Teledyne’s output is either made in the US and sold in the US, or made internationally and sold internationally - meaning no impact from new tariffs.
And while Teledyne does make significant exports from Canada to the US, this activity mostly relates to unmanned aerial systems used by the US military - meaning that they should be largely exempt from new tariffs.
The most significant impact will be on Teledyne’s US exports to China, which Mehrabian said represented only about 2 per cent of total company sales - largely oscilloscopes and avionics systems.
On the supply chain side, the CEO admitted that although there would be some tariff impact from essential imports of materials, electronics, and commercial cameras, these additional costs could be partly mitigated, and would likely total no more than $18 million per quarter.
Likening the current situation to that experienced during the post-Covid supply chain shortages of 2021 and 2022, which inflated the price of basic electronic components, Mehrabian added:
“Yes, the tariffs are going to affect us. Overall, GDP may go down one per cent, we may go down one per cent, but our revenue is still going to increase year-over-year.”
Digital imaging and Qioptiq
In the opening quarter of 2025, Teledyne’s digital imaging business unit posted sales of $757 million, up slightly on the same period last year as higher sales of commercial infrared imaging components and surveillance systems were partially offset by lower sales of X-ray products.
Mehrabian pointed to a solid book-to-bill ratio of 1.11 as evidence of healthy demand for the digital imaging business, although the tariff-related uncertainty would likely have some negative impact on commercial sales this year.
The CEO added that the Qioptiq business acquired from previous owner Excelitas earlier this year was “off to a great start”.
A recent filing with the US Securities and Exchange Commission (SEC) confirmed that Qioptiq and Excelitas’ US-based advanced electronics business were bought for just over $700 million in cash, and would now be integrated within Teledyne’s aerospace and defense electronics segment.
Mehrabian noted that Qioptiq had been awarded “major” new contracts with both the UK and German military a few months before the deal was completed, and that with expectations of a near-doubling of military spending across Europe over the next five years both Qioptiq and the wider Teledyne business stand to benefit.
“We have a good manufacturing footprint of our defense products in Europe,” said the CEO, pointing to production locations in the UK, Sweden, Denmark, and Iceland, among others.
• Immediately following the latest update Teledyne’s stock price dropped in value slightly, though it remains one of the better-performing photonics-related stocks in 2025, with a year-to-date fall of only 3 per cent thus far.
Currently trading at around $450 on the New York Stock Exchange, the company’s market capitalization stands at $21 billion.
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