Teledyne Technologies Inc.

04/24/2026 | Press release | Distributed by Public on 04/24/2026 15:24

Quarterly Report for Quarter Ending March 29, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
Overview
Teledyne provides enabling technologies to sense, analyze and distribute information for industrial growth markets that require advanced technology and high reliability. These markets include aerospace and defense, factory automation, air and water quality environmental monitoring, electronics design and development, oceanographic research, deepwater oil and gas exploration and production, medical imaging, and pharmaceutical research. Our products include digital imaging sensors, cameras and systems within the visible, infrared and X-ray spectra, monitoring and control instrumentation for marine and environmental applications, harsh environment interconnects, electronic test and measurement equipment, aircraft information management systems and defense electronics, and satellite communication subsystems. We also supply engineered systems for defense, space, environmental and energy applications. We believe our technological capabilities, innovation and the ability to invest in the development of new and enhanced products are critical to obtaining and maintaining leadership in our markets and the industries in which we compete.
Strategy
Our strategy continues to emphasize growth in our four business segments: Digital Imaging, Instrumentation, Aerospace and Defense Electronics, and Engineered Systems. The markets in which we sell our enabling technologies are characterized by high barriers to entry and include specialized products and services not likely to be commoditized. We intend to strengthen and expand our business with targeted acquisitions and through product development. We continue to focus on balanced and disciplined capital deployment among capital expenditures, acquisitions, stock repurchases and product development. We aggressively pursue operational excellence to continually improve our margins and earnings by emphasizing cost containment and evaluating cost reductions in all aspects of our business. At Teledyne, operational excellence includes the rapid integration of the businesses we acquire. Using complementary technology across our businesses and through targeted research and development ("R&D"), we seek to create new products to grow our company and expand our addressable markets. We continually evaluate our businesses and products to ensure that they are aligned with our strategy.
Trends and Other Matters Affecting Our Business
The global trade environment continues to be highly dynamic. There have been continuing significant tariffs and trade sanctions between the United States and other countries, including China. China has also restricted the export of certain rare earth minerals that we use in our products, which could disrupt the supply chain for these minerals and components made from these materials. Tariffs, trade restrictions and retaliatory measures could result in revenue reductions, cost increases on material used in our products or significant production delays, which could adversely affect our business, financial condition, operational results and cash flows. Our manufacturing facilities span across many countries which helps us mitigate the impact of certain tariffs and trade restrictions. Also, consistent with our strategy, we continually optimize our operations and take measures to contain costs to reduce the impact from tariffs. We may also implement additional pricing actions to mitigate the impact of these tariffs. We have been working to minimize potential delivery delays and shortages of components and raw materials needed for certain products we manufacture. To date, we believe our strategies have helped minimize our exposure to these conditions. In February 2026, the U.S. Supreme Court issued a ruling invalidating certain tariffs. Significant uncertainty exists regarding the timing and amount of any potential tariff refunds. We will continue to assess these developments as additional information becomes available.
To date, we have not been materially impacted by the current conflict in the Middle East; however, the conflict has increased the disruption, instability and volatility in global markets and industries, and could negatively impact our operations. If the ongoing conflict intensifies or expands, it could adversely affect our business, supply chain, partners or customers. Given the fluid and evolving nature of the conflict, we are unable to predict the full extent of the impact of the conflict on Teledyne at this time.
U.S. Government shutdowns could negatively impact our businesses. Previous U.S. Government shutdowns have resulted in delays in anticipated contract awards, issuances of export licenses, shipments and payments of invoices for several of our businesses.
The Company is currently benefiting from increased global defense spending.
Sales recorded and costs incurred recorded by subsidiaries operating outside of the United States are translated into U.S. dollars using exchange rates effective during the respective period. As a result, we are exposed to movements in the exchange rates of various currencies against the U.S. dollar. We try to reduce this potential volatility in reported earnings primarily through derivative instruments and hedging activities. See Note 13 for additional discussion around our derivative instruments and hedging activities used to mitigate these impacts.
During 2026, we plan to invest approximately $150 million in capital expenditures, principally to upgrade facilities and manufacturing equipment as well as to support internal growth initiatives. As part of a continuing effort to reduce costs and improve operating performance, we continue to take actions to consolidate and relocate certain facilities, rationalize products and reduce headcount across various businesses, reducing our exposure to weaker end markets. We continue to seek cost reductions in our businesses.
Results of Operations
First Quarter %
(dollars in millions) 2026 2025 Change
Net sales $ 1,560.1 $ 1,449.9 7.6 %
Costs and expenses
Cost of sales 886.3 830.4 6.7 %
Selling, general and administrative
237.4 233.9 1.5 %
Research and development
84.6 74.3 13.9 %
Acquired intangible asset amortization 57.6 52.0 10.8 %
Total costs and expenses 1,265.9 1,190.6 6.3 %
Operating income (loss) 294.2 259.3 13.5 %
Interest and debt income (expense), net (12.3) (17.3) (28.9) %
Non-service retirement benefit income (expense) 2.7 2.8 (3.6) %
Other income (expense), net (5.9) (5.9) - %
Income before income taxes 278.7 238.9 16.7 %
Provision (benefit) for income taxes 51.9 50.1 3.6 %
Net income (loss) including noncontrolling interest 226.8 188.8 20.1 %
Less: Net income (loss) attributable to noncontrolling interest - 0.2 (100.0) %
Net income (loss) attributable to Teledyne $ 226.8 $ 188.6 20.3 %
First Quarter %
(dollars in millions) 2026 2025 Change
Net sales (a):
Digital Imaging $ 816.9 $ 757.0 7.9 %
Instrumentation 361.4 343.3 5.3 %
Aerospace and Defense Electronics
277.5 242.5 14.4 %
Engineered Systems 104.3 107.1 (2.6) %
Total net sales $ 1,560.1 $ 1,449.9 7.6 %
Operating income (loss):
Digital Imaging $ 141.7 $ 122.3 15.9 %
Instrumentation 88.4 92.7 (4.6) %
Aerospace and Defense Electronics
71.4 55.7 28.2 %
Engineered Systems 11.7 10.8 8.3 %
Corporate expense (19.0) (22.2) (14.4) %
Total operating income (loss) $ 294.2 $ 259.3 13.5 %
(a) Net sales exclude inter-segment sales of $5.3 million and $3.8 million for the first quarter of 2026 and 2025, respectively.
First Quarter Results
The following is a discussion of our 2026 first quarter results compared with the first quarter results of 2025. Comparisons are with the corresponding reporting period of 2025 unless noted otherwise.
First quarter of 2026 compared with the first quarter of 2025
Our first quarter of 2026 net sales increased 7.6%, primarily due to higher sales in most segments. Net income attributable to Teledyne for the first quarter of 2026 increased 20.3%, primarily driven by an increase in sales and an increase in overall operating margin. Net income per diluted share was $4.85 for the first quarter of 2026, compared with net income per diluted share of $3.99.
Net Sales
The first quarter of 2026 net sales compared with the first quarter of 2025 reflected higher net sales in the Digital Imaging, Instrumentation and Aerospace and Defense Electronics segments, partially offset by lower net sales in the Engineered Systems segment. The first quarter of 2026 included $33.3 million in incremental sales from recent acquisitions, which are included within the Digital Imaging, Instrumentation and Aerospace and Defense Electronics segments.
Cost of Sales
Cost of sales increased $55.9 million in the first quarter of 2026, primarily driven by higher net sales. Cost of sales as a percentage of net sales decreased for the first quarter of 2026, to 56.8% from 57.3%.
Selling, General and Administrative Expense
Selling, general and administrative ("SG&A") expense increased $3.5 million in the first quarter of 2026 primarily due to higher net sales, including net sales related to 2026 and 2025 acquisitions. SG&A expense as a percentage of net sales decreased to 15.2% for the first quarter of 2026 compared with 16.1%. Corporate expense, which is included in SG&A expense, was $19.0 million for the first quarter of 2026 compared with $22.2 million, with the decrease related to lower transaction and integration costs. Stock-based compensation expense was $5.6 million for the first quarter of 2026 compared with $8.9 million.
Research and Development Expense
R&D expense increased $10.3 million in the first quarter of 2026 primarily due to higher R&D expense in the Digital Imaging segment.
Acquired Intangible Asset Amortization
Acquired intangible asset amortization for the first quarter of 2026 was $57.6 million compared with $52.0 million, with the increase primarily related to 2025 and 2026 acquisitions across multiple segments.
Pension Service Expense
Pension service expense is included in both cost of sales and SG&A expense. For the first quarter of 2026 and 2025, pension service expense was $1.2 million and $1.5 million, respectively.
Operating Income
Operating income for the first quarter of 2026 increased 13.5%. The first quarter of 2026, compared with the first quarter of 2025, reflected higher operating income in each segment, including incremental operating income related to 2026 and 2025 acquisitions.
Non-operating Income and Expense
Interest and debt expense, net of interest income, was $12.3 million for the first quarter of 2026 compared with $17.3 million, with the decrease related to lower outstanding borrowings compared to the first quarter of 2025. Non-service retirement benefit income was $2.7 million for the first quarter of 2026 compared with $2.8 million. Other income (expense), net, was expense of $5.9 million for the first quarter of 2026 and for the first quarter of 2025. Other income (expense), net, primarily consisted of foreign currency exchange losses for the first quarter of 2026 and for the first quarter of 2025.
Income Tax
The first quarter of both the 2026 and 2025 income tax provision considers income, permanent items, tax credits and various statutory tax rates.
First Quarter
(dollars in millions) 2026 2025
Provision (benefit) for income taxes (a) $ 51.9 $ 50.1
Income (loss) before income taxes $ 278.7 $ 238.9
Effective tax rate 18.6% 21.0%
(a) The first quarter of 2026 and 2025 includes net discrete income tax benefits of $8.0 million and $3.7 million, respectively.
In July 2025, the "One Big Beautiful Bill Act" (the "Act") was enacted into law. The Act includes changes to U.S. tax law, including provisions to accelerate tax deductions for qualified property and research expense. The Company estimated the 2025 impact in current results which included a cash tax reduction of approximately $30.0 million. The Company will continue to model the elective decisions before the 2025 tax return is filed in 2026. The 2026 impact is estimated to include a cash tax reduction of between $60.0 million and $70.0 million.
Segment Results
Segment results include net sales and operating income by segment but exclude corporate office expenses. Corporate expense primarily includes various administrative expenses relating to our corporate office that are not allocated to our segments. See Note 3 to these condensed consolidated financial statements for additional segment information.
Digital Imaging
First Quarter Change
(dollars in millions) 2026 2025 $ %
Net sales $ 816.9 $ 757.0 $ 59.9 7.9 %
Cost of sales $ 447.6 $ 422.5 $ 25.1 5.9 %
Selling, general and administrative expense
$ 127.2 $ 122.7 $ 4.5 3.7 %
Research and development expense
$ 52.4 $ 44.1 $ 8.3 18.8 %
Acquired intangible asset amortization $ 48.0 $ 45.4 $ 2.6 5.7 %
Operating income $ 141.7 $ 122.3 $ 19.4 15.9 %
As a percentage of net sales:
Cost of sales 54.8 % 55.8 %
Selling, general and administrative expense
15.6 % 16.2 %
Research and development expense
6.4 % 5.8 %
Acquired intangible asset amortization 5.9 % 6.0 %
Operating income 17.3 % 16.2 %
First quarter of 2026 compared with the first quarter of 2025
Net sales increased primarily due to higher sales of infrared imaging detectors, components and subsystems for both defense and commercial applications as well as higher surveillance and unmanned air systems for defense applications. Sales of infrared imaging detectors, components and subsystems increased $18.9 million, sales of surveillance increased $8.9 million, and sales of unmanned air systems increased $11.4 million. The first quarter of 2026 included $8.0 million in incremental Digital Imaging sales from recent acquisitions.
Cost of sales increased primarily due to higher net sales, partially offset by favorable product mix. The cost of sales percentage decreased during the period due to favorable product mix. SG&A expense increased primarily due to higher net sales, and SG&A expense as a percentage of net sales decreased. R&D expense and R&D expense as a percentage of net sales increased primarily due to the timing of FLIR product development activities, including both defense and commercial development activities. Acquired intangible asset amortization increased, and acquired intangible asset amortization as a percentage of net sales decreased.
Operating income increased primarily due to higher net sales and favorable product mix, partially offset by higher R&D expense as a percentage of net sales. As a result, operating income as a percentage of net sales increased.
Instrumentation
First Quarter Change
(dollars in millions) 2026 2025 $ %
Net sales $ 361.4 $ 343.3 $ 18.1 5.3 %
Cost of sales $ 190.2 $ 173.5 $ 16.7 9.6 %
Selling, general and administrative expense
$ 54.2 $ 49.7 $ 4.5 9.1 %
Research and development expense
$ 25.1 $ 24.2 $ 0.9 3.7 %
Acquired intangible asset amortization $ 3.5 $ 3.2 $ 0.3 9.4 %
Operating income $ 88.4 $ 92.7 $ (4.3) (4.6) %
As a percentage of net sales:
Cost of sales 52.6 % 50.5 %
Selling, general and administrative expense
15.0 % 14.5 %
Research and development expense
6.9 % 7.0 %
Acquired intangible asset amortization 1.0 % 1.0 %
Operating income 24.5 % 27.0 %
First quarter of 2026 compared with the first quarter of 2025
Net sales increased due to higher sales in the Marine Instrumentation and Environmental Instrumentation product lines. Sales of Marine Instrumentation increased $13.5 million due to stronger offshore energy and defense markets. Sales of Environmental Instrumentation increased $7.3 million primarily due to stronger sales of gas detection products. Test and Measurement Instrumentation decreased $2.7 million. The first quarter of 2026 included $5.0 million in incremental Environmental Instrumentation sales from recent acquisitions.
Cost of sales increased due to higher net sales and unfavorable product mix. The cost of sales percentage increased. SG&A expense increased, and SG&A expense as a percentage of net sales increased. R&D expense increased in each product line, and R&D expense as a percentage of net sales decreased slightly.
Operating income and operating income as a percentage of net sales decreased primarily due to unfavorable product mix.
Aerospace and Defense Electronics
First Quarter Change
(dollars in millions) 2026 2025 $ %
Net sales $ 277.5 $ 242.5 $ 35.0 14.4 %
Cost of sales $ 162.7 $ 144.2 $ 18.5 12.8 %
Selling, general and administrative expense
$ 30.4 $ 33.2 $ (2.8) (8.4) %
Research and development expense
$ 6.9 $ 6.0 $ 0.9 15.0 %
Acquired intangible asset amortization $ 6.1 $ 3.4 $ 2.7 79.4 %
Operating income $ 71.4 $ 55.7 $ 15.7 28.2 %
As a percentage of net sales:
Cost of sales 58.6 % 59.5 %
Selling, general and administrative expense
11.0 % 13.7 %
Research and development expense
2.5 % 2.5 %
Acquired intangible asset amortization 2.2 % 1.3 %
Operating income 25.7 % 23.0 %
First quarter of 2026 compared with the first quarter of 2025
Net sales increased due to a $36.1 million increase in defense electronics, partially offset by a $1.1 million decrease in aerospace electronics. The first quarter of 2026 included $20.3 million in incremental defense electronics sales from recent acquisitions.
Cost of sales increased due to higher net sales. The cost of sales percentage decreased due to favorable product mix. SG&A expense and SG&A expense as a percentage of net sales decreased due to higher transaction and integration costs in 2025 as a result of acquisitions. R&D expense increased, and R&D expense as a percentage of net sales remained reasonably consistent between the two periods. Acquired intangible asset amortization and acquired intangible asset amortization as a percentage of net sales increased primarily due to the 2025 acquisitions.
Operating income increased primarily due to increased net sales, and operating income as a percentage of net sales increased primarily due to favorable product mix.
Engineered Systems
First Quarter Change
(dollars in millions) 2026 2025 $ %
Net sales $ 104.3 $ 107.1 $ (2.8) (2.6) %
Cost of sales $ 85.8 $ 90.2 $ (4.4) (4.9) %
Selling, general and administrative expense
$ 6.6 $ 6.1 $ 0.5 8.2 %
Research and development expense
$ 0.2 $ - $ 0.2 *
Operating income $ 11.7 $ 10.8 $ 0.9 8.3 %
As a percentage of net sales:
Cost of sales 82.3 % 84.2 %
Selling, general and administrative expense
6.3 % 5.7 %
Research and development expense
0.2 % - %
Operating income 11.2 % 10.1 %
* Not meaningful
First quarter of 2026 compared with the first quarter of 2025
Net sales decreased due to lower sales of $2.7 million for engineered products and lower sales of $0.1 million for energy systems.
Cost of sales decreased primarily due to lower net sales and favorable program mix. Cost of sales as a percentage decreased due to favorable program mix. SG&A expense and SG&A expense as a percentage of net sales increased due to higher employee compensation costs.
Operating income increased primarily due to favorable program mix, partially offset by lower net sales and operating income as a percentage of net sales increased due to favorable program mix.
Financial Condition, Liquidity and Capital Resources
Our principal cash and capital requirements are to fund working capital needs, capital expenditures, income tax payments and debt service requirements as well as acquisitions. We may deploy cash for the stock repurchase program. It is anticipated that cash on hand, operating cash flow, together with available borrowings under our $1.2 billion credit facility, will be sufficient to meet these requirements during the next 12 months and during the period thereafter covered by our current longer-term business plan. To support acquisitions, we may need to raise additional capital. No cash pension contributions have been made since 2013 or are planned for 2026 for the domestic qualified pension plans.
Cash and Cash Equivalents
Cash and cash equivalents totaled $521.4 million at March 29, 2026, compared with $352.4 million at December 28, 2025, with the increase primarily related to cash generated from operating activities partially offset by the 2026 acquisition and capital expenditures. Cash equivalents consist of highly liquid money-market mutual funds, with maturities of three months or less when purchased.
Long-term Debt
Total debt, net of unamortized debt discount and debt issuance costs at March 29, 2026, was $2,476.3 million compared with $2,475.4 million at December 28, 2025. Subsequent to the end of the quarter, the Company repaid $450.0 million of its Fixed Rate Senior Notes due April 2026 primarily from cash on hand.
At March 29, 2026, we had $56.7 million in outstanding letters of credit, including $34.2 million against our credit facility.
Our credit facility requires us to comply with various financial and operating covenants and at March 29, 2026, we were in compliance with these covenants and had a significant amount of margin between required financial covenant ratios and our actual ratios. Currently, we do not believe our ability to undertake additional debt financing, if needed, is reasonably likely to be materially impacted by debt restrictions under our credit agreements. Available borrowing capacity under the $1.2 billion credit facility, which is reduced by borrowings and $34.2 million in outstanding letters of credit, was $1,165.8 million at March 29, 2026.
Our liquidity is not dependent upon the use of off-balance sheet financial arrangements. We have no off-balance sheet financing arrangements that incorporate the use of special purpose entities or unconsolidated entities.
We may at any time and from time to time seek to retire or purchase our outstanding debt through cash purchases in open-market purchases, privately negotiated transactions or otherwise. Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.
See Note 7 for additional information regarding our credit facility and long-term debt.
Stock Repurchases
In July 2025, our Board of Directors approved a stock repurchase program authorizing the Company to repurchase up to $2.0 billion of our common stock. As of March 29, 2026, $1.6 billion remained available under the repurchase authorization. The authorized stock repurchase program does not have a stated expiration date. Shares may be repurchased from time to time in open-market transactions at prevailing market prices, in privately negotiated transactions or via an accelerated stock repurchase program. Shares could be repurchased in a plan pursuant to Rule 10b5-1 of the Securities Exchange Act of 1934. The repurchase program is expected to remain open continuously, and the number of shares purchased will depend on a variety of factors such as share price, levels of cash available, acquisitions and alternative investment opportunities available immediately or longer-term, and other regulatory, market or economic conditions. We currently intend to fund future share repurchases, if any, with cash on hand and available borrowings under our credit facility. No repurchases under any authorizations were made in the first quarter of 2026.
Cash Flows
Net cash provided by operating activities was $234.0 million for the first three months of 2026 compared with net cash provided by operating activities of $242.6 million, with the decrease primarily driven by higher inventory purchases in 2026 partially offset by favorable operating results.
Net cash used in investing activities was $83.1 million for the first three months of 2026 compared with net cash used in investing activities of $775.0 million. During the first three months of 2026, we spent $53.4 million on acquisitions compared with $757.6 million. Capital expenditures for the first three months of 2026 and 2025 were $29.7 million and $18.0 million, respectively. During 2026, we plan to invest approximately $150 million for capital expenditures, principally to upgrade facilities and manufacturing equipment as well as to support internal growth initiatives.
Net cash provided by financing activities was $18.4 million for the first three months of 2026 compared with net cash provided by financing activities of $339.6 million. The first three months of 2025 included net proceeds from our credit facility of $315.0 million. Subsequent to the end of the quarter, the Company repaid $450.0 million of its Fixed Rate Senior Notes due April 2026 primarily from cash on hand.
Critical Accounting Policies and Estimates
Our critical accounting policies and estimates are those that are reflective of significant judgments and uncertainties and may potentially result in materially different results under different assumptions and conditions. Our critical accounting policies are the following: accounting for revenue recognition; accounting for business combinations, goodwill and acquired intangible assets; and accounting for income taxes.
For additional discussion of the application of the critical accounting policies and other accounting policies, see Note 1 to the condensed consolidated financial statements and also Management's Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies and Note 2 of the notes to consolidated financial statements included in Teledyne's 2025 Form 10-K.
Safe Harbor Cautionary Statement Regarding Forward-Looking Information
From time to time we make, and this report contains, forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995, with respect to management's beliefs about the financial condition, results of operations, acquisitions, capital expenditures, stock repurchases, product synergies, integration costs, tax matters and businesses of Teledyne in the future. Forward-looking statements involve risks and uncertainties, are based on the current expectations of the management of Teledyne and are subject to uncertainty and changes in circumstances. All statements made in this Management's Discussion and Analysis of Financial Condition and Results of Operations and in other sections of this Form 10-Q that are not historical in nature should be considered forward-looking. Actual results could differ materially from these forward-looking statements.
Many factors could change anticipated results, including: the impact of the 2026 conflict between the United States and Iran, including among other things, higher energy costs and energy supply constraints, disruptions in shipping, supply shortages of critical materials, including aluminum, metals, chemicals and industrial helium supplies, disruptions to air travel, the risk of retaliation against U.S. targets by Iran or its proxies, and slower global growth, the impact of policies of the U.S. Presidential Administration, especially with respect to new and higher tariffs, cutbacks in the funding of government agencies and programs, and the scaling back of environmental and green energy policies; escalating economic and diplomatic tension between China and the United States, including a "trade war" resulting in higher tariffs and restrictions on sales of goods and services; reciprocal tariffs from other countries, especially from members of the European Union; existing and new restrictions on the supply of rare earth minerals and permanent magnets from China; U.S. Government shutdowns, which in the past have resulted in delays in anticipated contract awards, delayed payments of invoices and delays in the issuance of export and other licenses; the inability to develop and market new competitive products; changes in relevant tax and other laws; foreign currency exchange risks; rising interest rates; risks associated with indebtedness, as well as our ability to reduce indebtedness and the timing thereof; the impact of semiconductor and other supply chain shortages; higher inflation, including wage competition and higher shipping costs; labor shortages and competition for skilled personnel; inherent uncertainties involved in the estimates and judgments used in the preparation of financial statements and the providing of estimates of financial measures, in accordance with U.S. GAAP and related standards; disruptions in the global economy; global conflicts including the conflict in the Middle East as well as the ongoing conflict between Russia and Ukraine; changes in demand for products sold to the defense electronics, instrumentation, digital imaging, energy exploration and production, commercial aviation, semiconductor, and communications markets; funding, continuation and award of government programs; cuts to defense spending resulting from existing and future deficit reduction measures or changes to U.S. and foreign government spending and budget priorities triggered by inflation, and economic conditions; threats to the security of our confidential and proprietary information, including cybersecurity threats; risks related to artificial intelligence; natural and man-made disasters; and our ability to achieve emission reduction targets and decrease our carbon footprint. Volatile oil and natural gas prices, as well as instability in the Middle East or other oil producing regions, could negatively affect our businesses that supply the oil and gas industry. Weakness in the commercial aerospace industry negatively affects the markets of our commercial aviation businesses. Lower aircraft production rates at Boeing or Airbus could result in reduced sales of our commercial aerospace products. In addition, financial market fluctuations affect the value of the Company's pension assets. Changes in the policies of the United States and foreign governments, including economic sanctions or in regard to support for the Ukraine or Middle East conflicts, could result, over time, in reductions or realignment in defense or other government spending and further changes in programs in which the Company participates.
While our growth strategy includes possible acquisitions, we cannot provide any assurance as to when, if or on what terms any acquisitions will be made. Acquisitions involve various inherent risks, such as, among others, our ability to integrate acquired businesses, retain key management and customers, and achieve identified financial and operating synergies. There are additional risks associated with acquiring, owning and operating businesses internationally, including those arising from U.S. and foreign government policy changes or actions and exchange rate fluctuations.
We continue to take action to assure compliance with the internal controls, disclosure controls and other requirements of the Sarbanes-Oxley Act of 2002. While we believe our control systems are effective, there are inherent limitations in all control systems, and misstatements due to error or fraud may occur and may not be detected.
Readers are urged to read our periodic reports filed with the SEC for a more complete description of our Company, its businesses, its strategies and the various risks that we face. Various risks are identified in our 2025 Form 10-K and subsequent Quarterly Reports on Form 10-Q.
All forward-looking statements speak only as of the date they are made and are based on information available at that time. We assume no obligation to publicly update or revise any forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements were made or to reflect the occurrence of unanticipated events, except as required by federal securities laws. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements.
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