Teledyne posted record Q2 2026 sales of $1,662.5M (+9.8%, ~9% excluding acquisitions) and diluted EPS of $5.37 (+21.2%), driven by infrared and defense demand in Digital Imaging plus tariff refunds, and raised full-year EPS guidance.
Revenue
$1.7B
+9.8% YoY
Net income
$252M
+19.9% YoY
Diluted EPS
$5.37
+21.2% YoY
Operating margin
20.0%
Teledyne's Q2 2026: record quarter, powered by infrared and defense demand — with a tariff-refund boost
Teledyne Technologies reported the largest quarterly sales and operating profit in its history for the second quarter ended June 28, 2026. Net sales rose 9.8% to $1,662.5 million, and net income attributable to Teledyne rose 19.9% to $251.7 million, or $5.37 per diluted share (vs. $4.43). Almost all of the growth came from existing businesses rather than purchases: recent acquisitions added only $12.2 million of sales, so growth excluding acquisitions was roughly 9%. The profit gain was concentrated in one segment — Digital Imaging, home of the FLIR infrared camera business — where operating income jumped 42.3%, helped partly by refunds of tariffs the U.S. Supreme Court struck down.
Key figures
Metric
Q2 2026
Q2 2025
YoY Change
Net sales
$1,662.5M
$1,513.7M
+9.8%
Sales from recent acquisitions
$12.2M
—
~0.8 pts of growth
Growth excluding acquisitions (derived)
~9.0%
—
—
Operating income
$333.2M
$278.2M
Read 0 community reports on Teledyne Technologies, or write your own.Write a report
Operating margin is the share of each sales dollar left after running the business (materials, labor, overhead, research and the amortization of acquired intangibles), before interest and tax. Non-GAAP figures are the company's own adjusted numbers, which mainly strip out the amortization of intangible assets acquired in past deals ($56.0 million pre-tax this quarter). Free cash flow is cash from operations ($315.2M) minus capital spending ($30.5M).
Organic vs. acquired growth, by segment
Teledyne is a serial acquirer — its 2025 purchases included the Qioptiq optical and electronics businesses from Excelitas ($702.8M) and Micropac ($51.2M), plus TransponderTech from Saab ($58.2M) late in the year, and in Q1 2026 it bought UK gas-sensor maker DD-Scientific ($53.6M). So it matters how much growth was bought. This quarter, very little: the two Q1 2025 deals were already in last year's second-quarter numbers, and the filing attributes the $12.2M of incremental acquired sales to Digital Imaging and Instrumentation only.
Segment
Q2 2026 sales
Q2 2025 sales
Reported growth
Acquired sales
Growth ex-acquisitions (derived)
Op. margin 2026
Op. margin 2025
Digital Imaging
$868.7M
$771.0M
+12.7%
$6.1M
~+11.9%
19.6%
15.5%
Instrumentation
$387.8M
$367.6M
+5.5%
$6.1M
~+3.8%
26.1%
27.6%
Aerospace & Defense Electronics
$286.4M
$264.8M
+8.2%
none disclosed
~+8.2%
26.0%
25.2%
Engineered Systems
$119.6M
$110.3M
+8.4%
none disclosed
~+8.4%
12.6%
11.0%
"Growth ex-acquisitions" is our calculation (reported increase minus disclosed incremental acquired sales, divided by last year's sales). The filing does not separate out currency effects, so these figures still include any benefit or drag from exchange-rate moves.
Digital Imaging (52% of sales) did the heavy lifting. Per the 10-Q, sales of infrared imaging detectors, components and subsystems rose $29.0M, surveillance systems $15.5M, industrial and scientific imaging systems $9.1M, and X-ray products $7.1M. Management's release singled out infrared detectors and systems for space, airborne and marine unmanned systems, and "counter unmanned" (anti-drone) applications. Segment operating income rose from $119.6M to $170.2M, which the filing attributes to "higher net sales, favorable product mix and tariff refunds, partially offset by higher R&D expense" (tied to the timing of FLIR defense and commercial product development) and higher inventory reserves.
Instrumentation grew in every product line — marine instrumentation +$9.7M on "stronger offshore energy and defense markets," environmental instrumentation +$7.2M (mostly gas detection, including $6.1M from DD-Scientific), and test and measurement +$3.3M — but operating income was flat at $101.4M (vs. $101.6M). The filing blames "unfavorable product mix": the extra sales came from lower-margin products, so margin fell 1.5 points.
Aerospace & Defense Electronics grew on a $20.8M rise in defense electronics; aerospace electronics was nearly flat (+$0.8M). Operating income rose 11.9% to $74.5M, with margin improving mainly on lower R&D spending.
Engineered Systems (engineered products for defense, space and energy) added $8.9M in engineered products; operating income rose 24.8% to $15.1M on "changes in program mix."
Takeaway: Teledyne's record quarter was earned mostly organically — acquisitions added less than one point of the 9.8% sales growth — but the 1.6-point jump in operating margin rests heavily on one segment, Digital Imaging, whose margin gain was partly helped by refunds of tariffs that the U.S. Supreme Court invalidated in February 2026. Instrumentation's margin actually slipped, so the company-wide margin expansion is less broad than the headline suggests, and part of it will not repeat once those refunds are collected.
What else moved the bottom line
Tariff refunds. After the Supreme Court's February 2026 ruling invalidating tariffs imposed under the International Emergency Economic Powers Act (IEEPA), Teledyne filed for refunds and "began receiving these refunds in the second quarter of 2026." The 10-Q says cost of sales was reduced by these refunds, "primarily within the Digital Imaging segment," helping cost of sales fall to 55.6% of sales from 57.4%. The filing does not quantify the refunds, so we can't say how much of the margin gain they explain — but they are a one-time benefit.
Higher overhead. Corporate expense rose to $28.0M from $21.7M on "higher compensation costs, including incentive compensation as well as higher professional services." Total selling, general and administrative expense rose 12.8%, faster than sales.
Lower interest cost. Net interest expense fell to $13.6M from $17.6M because of lower borrowings. Teledyne repaid a $450.0M note at the start of the quarter, cutting total debt to $2,027.0M.
Tax headwind. Pre-tax income rose 23.3%, but net income rose only 19.9% because the tax rate climbed to 21.7% from 19.3%. Last year's quarter benefited from $8.4M of one-off ("discrete") tax benefits vs. $1.2M this year.
Fewer shares. Diluted share count fell to 46.9M from 47.4M after buybacks, which is why EPS (+21.2%) grew slightly faster than net income. $1.6B remains under the $2.0B repurchase authorization approved in July 2025.
First half of 2026
For the six months, sales rose 8.7% to $3,222.6M ($25.2M from acquisitions), operating income rose 16.7% to $627.4M, and diluted EPS rose to $10.20 from $8.41. Digital Imaging operating income was up 28.9% and Aerospace & Defense Electronics up 19.3%, while Instrumentation was down 2.3% — the same pattern as the quarter.
Outlook
Management raised its full-year 2026 guidance in the earnings release:
Capital spending of about $150M for the year; the filing estimates the 2025 U.S. tax law ("One Big Beautiful Bill Act") will cut 2026 cash taxes by $60–70M.
The company ended the quarter with about $5.0 billion of funded backlog (orders with funding in place but not yet delivered) and reported record quarterly orders. The filing notes Teledyne "continues to benefit from increased global defense spending," while flagging risks from tariffs, Chinese rare-earth export restrictions, the Middle East conflict and possible U.S. government shutdowns.
Our read: Subtracting the first half ($10.20) and the Q3 guide from the full-year range implies Q4 GAAP EPS of roughly $5.43–$5.54 — a modest step up from Q3 rather than an acceleration, so the raise mostly banks the Q2 beat. The Q3 GAAP guide ($5.10–$5.25) sits below Q2's $5.37, consistent with some of Q2's tariff-refund benefit not recurring. Demand signals look solid: defense-linked infrared, unmanned-systems and defense electronics sales are driving growth, and record orders plus the $5.0B backlog support the second half. The things to watch are whether Digital Imaging's ~19.6% margin holds once refunds stop, whether Instrumentation's mix pressure eases, and how the company deploys a balance sheet that now carries $1.69B of net debt — management said it "continue[s] to review a number of acquisitions," so a larger deal could again change the organic/acquired mix.
Source: Teledyne Form 10-Q for the quarter ended June 28, 2026 (filed July 24, 2026); guidance, backlog, non-GAAP and free-cash-flow figures from the company's Q2 2026 earnings release (Form 8-K Exhibit, July 22, 2026).