Robert Mehrabian
Chairman, President and CEO at Teledyne Technologies
Thank you, Jason, and thank you for joining our earnings call. In the second-quarter. We achieved all-time record quarterly sales with overall sales increasing 5.1%, Furthermore, sales as well as GAAP and non-GAAP operating profit and operating margin increased Year-over-Year in every segment. For the total company, GAAP and non-GAAP operating margins increased 105 and 73 basis-points respectively. Excluding foreign currency headwind, which negatively impacted second-quarter sales growth by approximately 40 basis-points, growth in local-currency would have been 5.5%. GAAP operating margin of 18% was a second-quarter record, and non-GAAP operating margin was 21.4%.
Second-quarter GAAP earnings per share were $3.87 and non-GAAP earnings of $4.67 were also second-quarter record. And finally, including continued debt repayment through July, which totaled about $620 million year-to-date, our constant consolidated leverage ratio declined to 2.1 times.
I'll now comment a bit further on the performance of Teledyne FLIR and they announced cost reductions and the outlook for the balance of the year. In the two years since we've owned FLIR, we have resolved the most significant legacy tax matters, exited the consent agreement with the Department of State, consolidated leadership in marketing and operations for the FLIR defense portfolio, and corrected some historical product quality issues. As far as this effort, we also took a much more focused view of the defense business, aggressively pursuing those opportunities where we have truly differentiated technology.
I am pleased to report that the order book and backlog of FLIR, especially FLIR Defense significantly inflected during the second quarter. For reference, the commercial business across digital imaging. Both DALSA e2v and FLIR grew organically in the second quarter. While FLIR Defense sales declined year-over-year, nearly all of this was lower revenue in unmanned drone systems, as we achieved the milestone of shipping our 1,000 Man Transportable Robotic System increment 2 to the U.S. Army. Overall, orders at all of FLIR were 1.18 times sales and 1.5 times sales at clear defense. Larger orders not only included the recently-announced Black Hornet nano UAV to the U.S. military, but also additional UAVs for customers in Europe, as well as counter UAV systems and missile defense systems, utilizing both FLIR Imaging, radar and AI-based software systems, additionally, more surveillance imaging systems for the U.S. and foreign customers.
Having stabilized the business including achieving strong stronger backlog, it is now time to focus on execution and additional margin improvement. Thus, the charges announced this morning are for further reduction in the clear operating footprint and related headcount. We are accelerating the elimination of three leased sites, all of whose activities will be relocated to other FLIR Defense facilities, most of which are own locations. Today, we are reaffirming our prior 2023 full-year sales and non-GAAP earnings outlook including excluding the $10 million to $12 million charges that I just covered.
Supply-chain challenges have continued to improve and we were once again able to exceed our original second-quarter sales and earnings outlook by pulling forward some revenue from the 3rd-quarter. On revenue specifically, we continue to see total 2023 growth of approximately 5%, or sales of approximately $5.73 billion, with the third quarter being roughly $1.4 billion. We continue to see non-GAAP earnings of $19.10 at the midpoint of our guidance, excluding the charges referenced above.
I will now further comment on the performance of the four business segments. Second quarter sales in our Digital Imaging segment increased 2.3% with greater sales of X-ray products, commercial infrared imaging components and solution, and industrial scientific cameras, partially offset by lower sales of unmanned drone systems for defense applications. GAAP segment operating margin increased 51 basis points to 15.7%, and adjusted for reduced intangible asset amortization, non-GAAP, segment margin was 28 basis-points higher at 21.5%.
Turning to our Instrumentation segment, overall second-quarter sales increased 5.1% versus last year. Sales of marine instruments increased a healthy 10.5% in the quarter, primarily due to ongoing recovery in offshore energy markets, also greater sales of autonomous underwater vehicles.
Sales of electronic test and measurement systems which include oscilloscopes, digitizers and protocol analyzers collectively increased 4.9%. We encountered some softness in sales of analyzers for electronic storage and data center application, but this was more than offset by sales for wireless and video protocols as well as continued strong sales of oscilloscopes. Sales of environmental instruments were flat compared to last year with greater sales of air quality, process gas, safety analyzers, offset by drug discovery and laboratory instruments.
Overall, instrumentation segment operating profit increased 10.6% in the second quarter with GAAP operating margin increasing 123 basis-points to 24.8% and 80 basis-points on a non-GAAP basis excluding reducing the intangible asset amortization to 25.9%.
In the Aerospace and Defense Electronics segment, second quarter sales increased 10.2%, driven by growth of both defense electronics and commercial aerospace products. GAAP and non-GAAP segment operating profit increased over 20% with margins approximately 250 basis-points greater than last year. In the engineering Systems segment, second-quarter revenue increased 18.5% and operating profit increased 33.7%, representing 112 basis-points increase in margin from last year.
In conclusion, our short-term more economically sensitive businesses remained resilient in the second quarter, collectively drawing year-over-year. Although comparisons for some do become more difficult in the second-half. In addition, our longer-cycle Medical, Aerospace, Defense and Marine businesses continued to perform very well. Quarterly operating margin in our Instrumentation segment was an all-time record. Operating margin in our Aerospace and Defense Electronics segment was a second-quarter record, and just slightly less than the fourth quarter of last year.
And now through a combination of sales growth, operating leverage and the more aggressive cost actions mentioned earlier, I fully expect Digital Imaging margins to grow considerably over-time.
Now I want to turn the call over to Sue.
