Teledyne Posts Record Q2 as Digital Imaging and Defense Drive Guidance Raise

Transcript intelligence

What changed

Q2 2026 sales rose 9.8% year-over-year with non-GAAP EPS up 20.8%, beating consensus EPS of $5.79 with $6.28 actual and revenue estimates of $1.578B with $1.663B actual. Digital Imaging led with infrared detector sales growing over 20%. The unmanned systems business reached approximately $575 million, up ~12% YoY. Funded backlog hit a record $5 billion. Management raised full-year revenue guidance by $120 million and non-GAAP EPS by $0.55. Net leverage fell to 1.1, the lowest in six years, with interest expense not beginning until 2028. A $30 million government commitment was secured to expand Engineered Systems manufacturing capacity. Capex is expected to increase roughly 30% year-over-year. The Canadian government committed to a ~$300 million C2MI MEMS foundry partnership.

Guidance delta

Full-year 2026 revenue guidance raised by $120 million and non-GAAP EPS guidance raised by $0.55. This follows the prior quarter's raise to $6.415 billion revenue and $24 mid-point EPS. Guidance sentiment: raised. Management tone: confident.

Key takeaways

• Record Q2 sales up 9.8% and non-GAAP EPS up 20.8%, beating consensus on both metrics (EPS $6.28 vs $5.79 est; revenue $1.663B vs $1.578B est).
• Funded backlog reached $5 billion, with book-to-bill above 1 for the tenth consecutive quarter.
• Digital Imaging led growth with infrared detector sales up over 20%, driven by space, defense, and commercial demand.
• Unmanned systems business estimated at $575 million, up approximately 12% year-over-year.
• Full-year 2026 guidance raised for the second consecutive quarter — revenue up $120M and non-GAAP EPS up $0.55.
• Net leverage at 1.1, lowest in six years, preserving capacity for further M&A and capex of roughly 30% YoY growth.

Management priorities

• Expand space imaging business to $400-450 million by year-end 2026.
• Launch new unmanned platforms including Black Hornet 4.
• Increase capex approximately 30% YoY to scale production capacity.
• Pursue midsize acquisitions around $1 billion while integrating Qioptiq, DD-Scientific, and Micropac.
• Leverage cross-selling opportunities across recent acquisitions.
• Capitalize on government missile, munitions, and hypersonics programs.