Okay, great! Can you all hear me? All right. Good morning, everyone. I'm Kristine Liwag, Senior Aerospace and Defense Analyst here at Morgan Stanley. Before we begin, standard disclosures. For important research disclosures or for important disclosures, please use the Morgan Stanley Research Disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley representative. So with that, I'm really excited to kick off our session, and I think for the timer, can we also get that started? Kick off our session with Teledyne, and today, I'm very honored to have Jason VanWees, who is a man of many hats and many jobs within Teledyne, the primary being the Vice Chairman of the board of directors. So, Jason, what other roles do you wear at Teledyne these days?
Well, I've for those folks who don't know me, again, I'm, you know, Vice Chairman at Teledyne. I've been with the company a little over 24 years, so easy trip for me here. We're based in Los Angeles. Always been based in Greater LA. Today, we're in Thousand Oaks, which is sort of LA West Valley. But I've been with the company, and the company's changed quite a bit since I've been there, quite a bit for the better. My primary responsibility right now is acquisitions and capital allocation. Of course, that's not done in isolation. Our operating execs clearly aren't just given acquisitions, just buy-in by them. There's only businesses they want to own, et cetera.
But that's my primary job these days, is to, you know, fortunately spend the cash we generate, then explain to folks in this room why and on what. That's most of it today.
Great. You know, I mean, with your M&A background, I mean, Teledyne has been pretty acquisitive over the years, and at its core, Teledyne is a sensor and a decision support technology company. But you have such a broad set of complex products and many different verticals, with different end markets. Can you help us understand what Teledyne is today and where it's headed?
Yeah, sure. So sometimes people think we're a little bit too complicated, and that's probably as much my fault, because I'm happy to tell everybody everything we make and every customer we serve in every end market. And so I guess I bear some of that, you know, it's the reason why people think that, but actually we're quite simple. I mean, in digital imaging, this is a little bit of an exaggeration, but only a small exaggeration. What we're really good at doing is making sense of the sensors. And so we end up in certain niches like semiconductor wafer inspection, where microns and nanometers matter a lot first. Maybe a machine vision application like fill level in a bottle. We'll also end up on satellites, where people want really high resolution from, you know, space to ground.
But it's not necessarily, in all these cases, a unique facility or even a unique engineering team. This is a lot of commonality. And again, in X-ray, what do we do? In X-ray, we make high resolution, low dose sensors. We're fabulous there. We design and then make it at the CMOS foundry. But again, fundamentally, what we and FLIR, which we acquired two years ago, are really being sensor leadership, making sense of the sensors, and then you end up in various verticals, and we do compete against other people in these verticals. But fundamentally, both companies have their heart as sensor. And even in some of our other segments, again, I, you know, sometimes it looks more complex in aerospace and defense electronics. Again, I'm exaggerating a little, but really only a little. We essentially do two things with most of our businesses.
We make microwave devices or specialty components and subsystems for radar, electronic countermeasures, and we make high reliability interconnects. That's the vast majority of aerospace and defense electronics. And we have a marine business that's about $500 million this year. But again, really, what we do there is we make specialty acoustics, that's sonar-type systems, and specialty interconnects that work underwater. And I could go around the portfolio, but the portfolio is actually relatively simple. But if someone wants to know every product, every, you know, customer, competitor, landscape, I'm happy to do it. And sometimes maybe I should just shut my mouth and say we're a diversified industrial tech and, leave it at that. But we really aren't that complicated.
That's been, you know, part of the goal is to do double down acquisitions in certain markets, make those markets bigger and more material, and really have less moving parts with time, just by doing nearly 70 acquisitions, so.
And so when you talk about where the company's headed going into the future and thinking about maybe your M&A strategy, is there a particular end market that you want to expand to or more product type? I mean, because, you know, as you said, it's a diversified industrial, so you do things from all the way to space and all the way under sea and everything in between. Where, where is the direction in terms of your priority?
Yeah, a couple of maybe, sort of high-level guidance principles. One, we don't want to be in commoditized businesses or businesses that we think are subject to commoditization. So most of our markets tend to be relatively rational competitors, including ourselves. It's an oligopoly of competitors, and it's something that's a little bit more nichey. I would say that's an overriding theme across our portfolio. We have made a push over the last couple of decades. I'd say the portfolio shaping, you're never really done because we're going to keep doing acquisitions, but that was most of the first decade, a little more. Probably 2011, 2012, is where we finally felt good with the portfolio. We still have aerospace and defense as kind of the largest single end market. You know, all things aero and defense are sort of about 30% of sales.
But there was a time when I joined, we were 50% government, and at that point, we didn't really view the defense business as a nice shock absorber to global macro, which we sort of view it as now, actually, maybe even a growth engine over the next, you know, 6 quarters or so relative to who knows what, with global macro. But when it's 50% of your business, the investment accounts for your top line. Can't run, can't hide, and it kind of was more of a ball and chain than a shock absorber. So we like defense business, we like aerospace business, we like energy business. We like some of those businesses, but in their proper proportion. We have leaned more commercial. Now, we've bought an instruments, we've bought an imaging. We've probably done more unit count acquisitions in instrumentation.
We've spent more capital in digital imaging. But nonetheless, being a little bit more commercial, is it 65%, 75%? Why more commercial? At least through cycle, commercial is a little bit higher gross margin. It's a little bit higher growth in government spend, which may be 2, 2%, you know, through cycle, maybe higher, you know, for outlays next year in Q4. Avoiding commoditized markets, being a little bit more commercial in nichier markets, but again, not running from a nice portfolio of long cycle, predictable businesses. I'd actually extend that to 40%, if you include in descending order, government, medical, energy, and commercial aero. That's about 40% of the portfolio. The rest is 60% higher margin, higher growth through cycle.
Mm-hmm. And going back to digital imaging, FLIR was the biggest acquisition the company's ever had, 2021, right in the midst of the pandemic uncertainty. Can you walk us through the rationale of expanding into the digital imaging, expanding your portfolio there with FLIR? And also in hindsight, how has the transaction been?
Yeah. So, first of all, the rationale, I mean, we actually have been watching FLIR for a long, long time. It was more sort of theoretical and exploratory, but the first meeting amongst their chairman was actually 2011. So it was a decade before the deal. Again, it was more sort of theoretical at the time, and maybe it's a segue from my previous comment. You know, again, even though the valuations and the numbers probably didn't work then, we really weren't that interested because the corporate strategy at the time was to basically enter commodity markets to, quote, "democratize infrared," home security cameras and the like. That was completely uninteresting for us. Now, they sold those businesses in February 2018.
That's when it became very interesting, kind of returned to its roots of, you know, its dialogue then changed much, much more to, "I'm a defense company. I'm gonna open an Arlington corporate office." But more to look at the 2020 10-K, and the year before the deal, they were 30% U.S. government. It kind of returned after that divestiture in 2018 to a high-reliability commercial industrial with a backbone of government defense, which is what we are. However, all the products are really complementary, and the one thing that really got us more interested in FLIR, other than the fact that they returned the portfolio to its roots, was that we tried to enter FLIR's markets. We have a legacy in space-based infrared sensors.
We can talk about it later, but we're on—we were on wide field, you know, of the tracking layer, SDA Tracking Layer, tranche zero. We're on tranche one. We're bidding with many, many primes on tranche two right now. That's been our legacy, but those are more nichey, smaller markets. They're good markets for us. They're great markets for us. We tried to get into FLIR's still high reliability, but higher volume ground-based infrared, and we largely failed. I think in hindsight, we dramatically underestimated the combined power of the technology, the brand, the channel, and that really made us more, more exciting about FLIR. And FLIR, frankly, it fit the model of all our other acquisitions, not that maybe we'll never buy a direct competitor. Perhaps we'll do that. We haven't done that, though.
I mean, every acquisition has sort of followed the thesis of adding complementary products to markets we're already in or customers we already serve, and FLIR fit that. Now, how's it doing so far? The commercial businesses are actually holding up probably a little bit better than I thought. I'd, you know, even in real time, I maybe, you know, kinda run the company as pessimists. That's sort of our, our human nature, and I'm sort of a little bearish, only from a top-down point of view. Bottom-up Teledyne stuff, you know, is actually reasonably well. But the FLIR commercial businesses are growing, and they grew in the first six months of this year.
If you were to ask me two years ago, you know, and I'm sure you have some of your other companies would express a sentiment that defense outlays would be down until kind of March, April 2023. That was not the base case in 2020. So defense has been a little bit slower than we otherwise would have liked. That said, it finally inflected in the last business on the defense side in Q2 of this year, where FLIR defense bookings were about $1.5. All things FLIR book-to-bill in Q2 was 1.2. So finally, we got the momentum on the defense side, where defense side had been lagging a little bit. A lot of nice awards, some competitive takeaways over the last 12 months.
So in terms of sales, I'd say maybe a little bit behind, but only because of the defense. The commercial's been ahead. In terms of absolute profit and margin, both on plan, for where we are right now. Yeah.
Let's talk margins. Last quarter, you guys rolled out some cost synergies with integration and plant consolidation. Can you tell us where you are in the journey for extracting cost synergies? How much could that expand margins?
Yep. So in terms of, that's really particular to the digital imaging segment, and actually, margins and instrumentation were an all-time record in Q2. Aerospace and defense electronics had their second highest margin of all time in Q2. Only Q4 of last year was higher. Digital imaging, while it was up year-on-year, was a little bit lower than, say, peak margins from maybe a Q3, Q4 of 2021, when margins were closer to 23, 23.5%. End of the quarter, they were, well, let's call it 22%. So we said on the call that we think margins in digital imaging can get back to 24%. Those cost reduction actions, all the corporate costs were taken out right away. There wasn't a charge, and then cash costs trickled out.
The corporate office was vacated the quarter we did the deal. I spent, you know, six weeks in Arlington, making sure personally that happened. You sort of say, well, why now? Well, some of these items, one of the programs that FLIR had last year, there's a little bit of a programmatic gap this year in the unmanned ground systems business. And rather than keep that cost structure and wait two years when we think the new program will be awarded. We'll worry about that then. Let's get the costs out now, having shipped most of those units on this one program called Man Transportable Robotic System. So the largest of the lease terminations that we referenced are in the unmanned ground business. We're relocating it to two nearby own sites. One that's a FLIR, one that's a legacy Teledyne.
And then I think there was a poor acquisition in our view, actually made during due diligence, in 2020, of a commoditized drone business that we partially shut down last year in 2022, and there was a lease termination in September 2023. So it made sense to basically close the rest of that business. But I think that's part of the reason we get back from the 22% to 24%, you know, over the next couple of years. But the other thing with FLIR that I'm excited about now is that, you know, the first two years, we spent some time on what I'd call more revenue-degrading activities. That's kind of the Teledyne flavor for a public acquisition. Get rid of the corporate office.
I mean, our revenue went up 40%, and corporate costs went from, like, $62 million to $65 million. You know, there was really no additions, you know, of anyone, you know, significant in terms of corporate costs. But what FLIR always had, which is one of the reasons why we liked the business, is their gross margin was 50% as a whole, relative to Teledyne's 40%. Their sales per square foot was 50% higher, or their sales per employee were 50% higher. Their sales per square foot is actually 100% higher than Teledyne. They had large, big box sites generating hundreds of millions of revenue. But as we did some 80/20, some shutting down the commoditized businesses, the commercial businesses, as I mentioned before, were growing.
But the overall top line has kind of been flat because these 80/20 activities to reduce certain product lines, Raymarine, freshwater fishing, commoditized, you know, drones. We really haven't enjoyed the incrementals on a pretty big revenue stream of just shy of $1.9 billion and a very high gross margin. It hasn't really. There hasn't been net shrinkage, but there really hasn't been net growth of that business. And getting the incrementals off that high gross margin business when it finally starts to inflect, which I think is probably Q4 of this year, probably not Q3, despite the nice orders in Q2, to turn those orders into revenue, it's defense business. It's gonna take another quarter, so I think Q4 will finally inflect.
And then the incrementals on that, in addition to the cost cuts, I think that's gonna considerably help the margin along. Back to where we were, maybe 23-24%, you know, in 2021.
Just to clarify, Jason, it's about 200 basis points, you think, in the next year or two?
I wouldn't say a year. I'd say a year or two. Yeah, my guidance for next year is closer to sort of 23. But the room for outperformance or underperformance is really going to depend on global macro. If some of the commercial markets in that segment outside FLIR, industrial and scientific vision, if that stays healthy or grows, I think it could even be next year. On the other hand, if, you know, there is some sort of global macro event or things get ugly, you know, in some of those more commercial markets, more so than modeled this year, then maybe there's some room for underperformance. But either way, I think next year is higher than this year, in part because of the cost cuts.
But outperformance, underperformance, say, relative to 23%, is probably gonna depend on, you know, this is true for all of Teledyne, you know, the 60% of the portfolio that's not, you know, government, aero, energy, medical, how that performs. And we shall see. Yeah.
FLIR doubled your revenue, right, with that, with that deal. When you think about the integration journey, how far along are you with extracting revenue synergies? Because there's a lot of commonalities with diversified industrials. Is there incremental opportunity there for outsized growth, from that synergy?
Well, first of all, I think yes, but, I mean, we've actually never quoted a, you know, a revenue synergy number.
Mm-hmm.
To me, it's sort of how, how do you parse between a, a revenue synergy and what you're just running the business, and it's growing now? It's, you know, there's, that's, that's always been something challenging for us, even though, you know, again, you mentioned the M&A track record and the returns we've had. They've, they've, they've all been very good. I would say in some areas, there definitely were some quick wins. And this really even went to due diligence, to your point, in the sort of peak COVID. It just so happens that FLIR had an industrial machine vision business, and it was in Canada. We couldn't travel there to do due diligence, but where's our industrial machine vision business headquartered? Canada. So really, integration almost started during due diligence between their business and our business.
We could visit it, and that business largely is run by what formerly known as Teledyne DALSA. DALSA is still the brand name we use for machine vision cameras, and definitely that's going extremely well. I mean, I think we've probably fair to say, probably outperformed industrial automation and machine vision peers, especially the last couple of quarters where there's been... The market's not easy right now. You know, but the FLIR business contracted a little bit in Q2, but it grew in Q1 and grew in the first six months, which has really been an outlier for machine vision. So that one, where our channel is much better. You know, we're much stronger in Europe and Asia in that commercial market than FLIR, which was historically more North American centric. So that business has done very well, really leveraging the Teledyne channel.
What we've tried to do, and it's slowly happening, is we have, you know, some of our, our rejects, if you will, on space-based infrared, they get scrapped if they're not absolutely perfect, either for a big science project. We made, you know, 95% of the pixels on James Webb Space Telescope, but those sensors have to be absolutely perfect. Same thing for maybe a classified application that's looking down. But those are definitely good enough for tactical grade. In the past, that might have been something that we scrap. We're seeing, you know, how much that can be used by FLIR to have very, very high performance, maybe not space grade, but very, very high performance tactical, something that's not in their portfolio.
Because even at the sensor level, the exact chemistry that we use to make our space-based sensors is slightly different, so it doesn't do it. And we also don't do what FLIR does. Historically, we didn't do uncooled infrared, indium antimonide, another technology called Type II SL, Type II strained layer superlattice. We historically did mercury cadmium telluride. So there's new products also that didn't exist and probably wouldn't have existed because we didn't have the channelized that we failed in some of the tactical applications, and FLIR didn't have the sensors at the quality. Even though they were very, very high quality in their application, they didn't have the same quality that we did.
I think it's gone, it's gone pretty well, because, again, the revenue is flat or something, which I'm not really happy about, but that's inclusive of 80/20, inclusive of setting it out on a product line. It's been flat, but I hope we inflect and grow again, starting in Q4. Yeah.
Great. Now, maybe going back to the topic that's near and dear to your heart, which is, acquisitions.
Right.
You know, looking back, Teledyne has historically been acquisitive with roughly 70 deals, what, $12 billion in consideration over the past two decades. I mean, these are pretty large numbers, Jason. So the playbook has been consistent. You quickly delever after one acquisition and build capacity for the next target. You know, post-FLIR, now your leverage is just slightly above 2x net debt to EBITDA. How do you think about the pipeline of opportunities today? And, you know, before you've done smaller deals, before FLIR, what's your appetite, small versus large, and how should we think about capital deployment?
Yeah. So well, first, in terms of your-- you're right, the leverage immediately after the FLIR transaction was almost 4 times debt to EBITDA, as the last quarter was 2.1 times. So we've really burned down the leverage quite a bit. And, you know, that's despite even in the last year, it's really only that one year immediately following the FLIR deal, that the priority was deleveraging. The priority, even though the biggest use of funds will probably be deleveraging, just given the cash flow, but the priority returned to acquisitions about one year following the deal. And we haven't done tons, but in the last, you know, 15 months, we've done 3 bolt-on acquisitions, spent about $160 million. So we sort of got back on the treadmill, you know, really in mid-2022, and we continue that right now.
I think the environment for bolt-on acquisitions and our appetite, frankly, is really good. I don't want to say it's probably the best ever, but it's an odd time right now, where really, regardless of the high reliability market that Teledyne's in, I mean, COVID happened, and it's over. Aero was down, now it's over. Defense was slow, and now outlays are up. You know, commercial markets, most people, entrepreneurs, have pretty good trailing numbers, but the future is a little uncertain. So if you're going to do a once-in-a-lifetime decision, and even if for an entrepreneur is maybe looking to diversify, well, you know, treasury is, you know, at 5% versus 0%, that's a different environment to contemplate the sale of your business and diversifying. So I think those are good.
If we don't do another, you know, 2, 3, 4, or 5 over the next 15 months, I'd be disappointed. The appetite and the bandwidth for something large is definitely there. I mean, we've done, you know, 8 public companies in 3 separate countries. Of course, FLIR was the largest, but the playbook's really, really the same in all those events, and we have the capacity to do it. But again, that's going to depend on, you know, the right deal at the right time, at the right price, and we'll be prudent. But I'd say, the appetite is certainly there, and the balance is there. And, you know, it's a, you know, again, I mentioned before, we've never bought a direct competitor.
I mean, even in kind of today's, you know, strange environment of FTC and whatnot globally, the—we've never got a second request from any jurisdiction anywhere on any one of our deals. U.S., China, you know, you know, do merger control clearance there. Never happened. So buying a complementary business again, but in markets and customers that we already serve, that's really who we are, and again, we do this all day long if we could. Yeah, and we'll try.
And for targets, what are your thresholds? Because you talk about not wanting to be in a commoditized business. That's very clear. But what other metrics do you look at for the target?
Yeah, so I mean, what I say we show, but really, you know, I show to, to the board, is a return on capital metric. And I mean, most people say that, you know, want to get a return on capital after tax, you know, year 3, year 4, but it depends. If it's a smaller deal, a stock deal, there's some risk. Maybe it has to get there, maybe it has to be 24 months. For FLIR, and we were happy, actually, we paid a high price for us. And admittedly, we probably looked at that deal a little bit more on an ROE basis than an ROC basis. I mean, at the time, we were net cash, and we were able to recapitalize Teledyne completely at, you know, $4 billion of fixed rates of 2% debt, in 2021.
So yeah, I think we're gonna get solidly double-digit ROE. Is it gonna be, you know, 10% ROC on total capital by year three? Probably not. That would be the next year, but we'll be there by ROE, given the, you know, the cost of capital on that deal specifically, I'm pretty confident. But that said, I mean, yeah, we, you know, we've not been one to pay crazy prices. On the other hand, you know, like you said, we've done 67 deals, and no one's been a martyr for Teledyne along the way. So every process is competitive. We buy good businesses at fair prices. That's... You know, but again, every deal is a little bit different, so.
Let's switch gears to supply chain. During the pandemic, difficulty sourcing some parts led Teledyne not to be able to ship parts, and then you were able to reengineer some parts or buy at a premium from some brokers. Where do we stand now on supply chain lead times and your ability to ship the orders that you have?
Yeah, maybe sort of bifurcate that. So in terms of actual availability of parts. I mean, it was a challenge, both in the availability as well as the cost. I mean, we never sort of added bad broker premiums in a non-GAAP presentation, but they were, they were significant, in late 2021, 2022. That's come down a lot. Now, the, the OEM price is not the 2019 OEM price. There's still inflation, but it's clearly not the broker price, and bill of materials has been substantially lower on certain components. I wouldn't want to say Teledyne as a whole, just given the inflationary environment, but certain components are definitely cheaper this year than last year because we're buying from OEMs as opposed to brokers.
Now, the flip side of that, that we're not particularly proud of, is, you know, we built a lot of inventory, mostly in 2022, about $125 million actually of inventory in 2022. We've largely stopped that build, but we haven't yet been able to amortize that inventory build, get it down to really drive conversion. I'm hopeful that we'll start seeing some of that in Q3 and in Q4. Part of that was when we were able to wean ourselves off the brokers and buy from OEMs, at least late 2022, you know, the OEMs were non-cancellable commitments up to a year. And so we basically had to make those purchases, and those purchases keep arriving sort of through Q3.
But then I think after that, lead times have gone down, the amount of required purchase commitment you make has gone down, and I think we'll be able to amortize some of the inventory build and get better conversion next year. Where today, again, we haven't had, you know, inventory build like we did last year, but again, we haven't had the high conversion that Teledyne is really used to in the past. But I think, you know, maybe late Q3, Q4 next year, we'll be able to get some of that back. Yeah.
Thanks. Now, we want to leave some time for questions from the audience. So if you want to ask a question, raise your hand, we'll give you a mic. Don't be shy. I know it's really early, but not in Eastern Time. Anybody? Nobody? It's okay, I've got lots. So, okay. So, you know, I am an A&D analyst, so let's focus on A&D a little bit. You know, A&D Electronics has been a particularly bright spot, right? You had 80 basis points of margin improvement this year versus last year for your expectation. How much of this is related to aircraft OEM increases, finally flowing through? And, you know, you mentioned that defense, you think it's going to be another quarter.
Yeah.
So what are you seeing in that aerospace environment? Because when you look at the production rates out of Boeing, out of Airbus, I mean, we're looking at 70% volume increase in the next two, three years.
Yeah. So, first of all, I mean, the segment, in that segment, defense has grown. So, you know, this is one, I think the execution's been good. There have been some competitive wins. But often, it's been a little bit easier to be a subcontractor than to be a prime contractor. Getting those awards that are more dependent on the outlay itself has been a little bit harder at FLIR. And even CE, it's been a little bit harder in some of our other segments that we've grown in places like NASA and things like that. But aerospace and defense electronics, both the commercial aero, to your point, has grown. I'll get into your question in a little bit, but the defense has actually grown on an absolute basis for the last several quarters.
A part of that segment is also not aerospace or defense, but it's high-rel industrial that's built in a defense factory. It's a classic Teledyne high-spec, multi-market component. It may go on electronic test and measurement equipment, or it may go on a satellite. You know, high-spec, again, microwave devices or microwave cable, for example, may be in an RF test stand or may be on a satellite. That business, right out of sort of size it, I mean, commercial aero is definitely in a good cycle. That's probably about $180 million of that segment, so it's not huge. That's why I said sort of in descending order, you know, government, defense, medical, energy, and then aero on the longer cycle side of things. Today, we're about two-thirds aftermarket.
Part of that is the OEM being in a little bit of a funk.
Mm-hmm.
Part of that is just the, you know, the nature of the business sort of coming off the bottom of the cycle. But we're about two-thirds aftermarket, and that's, you know, aftermarket, that's service and spares, but that's also new avionics for old aircraft, you know, what we define as retrofitting. Those two together are about 65% the total volume. So OEM coming back would be good, but we're not dependent on it. We're, you know, today, we're more of an aftermarket house on aero, and we've... That's helped us. But again, the defense business has also been growing. I mean, commercial aero was up, you know, teens during the quarter, year-on-year, but defense was high single.
You know, maybe a little bit less because we had one commercial satellite program that was with OneWeb for, you know, commercial communications. That shipped last year, so that was actually down. But defense, defense was actually up, I think, high single, and commercial aero was double in the quarter. So it's been a... And margins have been a good spot for us, too. It, you know, supply chain has been tough. It's probably been a little bit more acute in parts of imaging and parts of instrumentation. It's not been easy in aerospace and defense, but execution's been really, really good both on commercial aero, but also on defense electronics, it's been very, very good for us. Yeah.
Diving a little bit more on the aftermarket comment. You know, there are some bears on the aftermarket that look at global air traffic, and here we are, we're kind of back to pre-pandemic levels. What are you seeing from order activity from your customers? Are you seeing a slowdown or are you seeing continued strength? And what's the pricing environment like?
So, the pricing environment, I mean, all of Teledyne, you know, we haven't really been gouging pricing this year, as an example, is maybe, you know, 3.5%. It's probably a little bit higher in certain parts of aero or in certain parts like energy, where the energy companies, you know, obviously it's in a different upcycle right now. Brent is, you know, $80 or more. So it's been a little bit higher there than maybe some of the pure commercial. It's been a little bit less, but there's not a huge deviation. We haven't had, you know, as a big group, you know, any certain business of 20% or something like that. That's not been the case. I'd say again, order trends have been good.
A&D is a little bit lumpy, but on a full year basis, last year, I think it was, you know, maybe 1.05 book to bill, so backlog is still growing. It's, it's not coming down. Despite the revenue growth, there's still orders, you know, over a couple of quarter periods exceeding sales. So, I'm not particularly concerned about it. You know, in fact, you know, part of me, I actually wish I had a little bit more aero because it's been in an upcycle. I mean, right now, it's only, you know, like I said, $180 million of Teledyne's, you know, $5.7 billion.
Yeah.
So either way you look at it, it's sort of 3% of sales. So if it keeps doing great, great. If the bears are right and 3 goes to 2.8, it's, it's not gonna matter that much, to be honest, so.
Well, great. I think that's it for the time. This concludes our session on Teledyne. Jason, thank you very much for joining us this morning.
Thanks.
Great.
Goodbye, everyone.