01—Abstract
Summary
Summary of the 10-K filed March 1, 2018. Cited figures are marked; the original filing is the authoritative source.
Teradyne, Inc. reported strong revenue growth of 22%a in its Semiconductor Test segment for 2017, driven by increased sales across various semiconductor device types and services.
The Industrial Automation segment also showed significant growth, with revenues increasing by 72% due to higher demand for collaborative robots, reflecting the successful integration of Universal Robots. However, the Wireless Test segment experienced a year-over-year revenue increase of 16%, recovering from a significant decline in 2016, which was largely attributed to operational efficiencies and slower smartphone growth from a major customer. Despite the overall revenue growth, the company faced a substantial increase in income tax provision for 2017, largely due to the U.S. Tax Cuts and Jobs Act, which resulted in a provisional tax expense of $186.0 millionb.
The company also continued its commitment to shareholder returns, increasing its quarterly cash dividend and announcing a significant new share repurchase authorization. Teradyne's backlog at the end of 2017 stood at $626.4 millionc, with a substantial portion expected to be delivered in 2018, indicating continued demand for its products.
02—Key points
Key Highlights
- Semiconductor Test segment revenue grew 22% in 2017, driven by strong demand across multiple product categories and services.
- Industrial Automation segment revenue surged 72% in 2017, showcasing successful integration and growing demand for collaborative robots.
- The Wireless Test segment revenue increased 16% in 2017, marking a recovery from a challenging 2016 performance.
- A provisional tax expense of $186.0 million was recorded in 2017 due to the U.S. Tax Cuts and Jobs Act.
- The company increased its quarterly cash dividend in January 2018 and authorized a new $1.5 billion share repurchase program.
- Backlog at the end of 2017 was $626.4 million, with most expected to ship in 2018, indicating continued business momentum.
- The company highlighted the concentration of its customer base, with its top five customers accounting for 32% of consolidated revenues in 2017, and a single OEM customer (including sales to its OSATs) contributing 22%.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2017, Teradyne, Inc kept $0.12.
- Revenue$2.14B100.0%
- Cost of revenue−$915.2M42.8%
- Gross profit$1.22B57.2%
- Operating costs−$696.1M32.6%
- Operating income$525.3M24.6%
- Interest, other & tax−$267.7M12.5%
- Net income$257.7M12.1%
Where FY2017 revenue went
$2.14B- Cost of revenue: $912.7M, 43% of revenue
- Other operating costs: $349.6M, 16% of revenue
- SG&A: $348.9M, 16% of revenue
- Interest, other & tax: $267.7M, 13% of revenue
- Net income: $257.7M, 12% of revenue
Kept 12% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2017filed March 1, 2018Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $2.14B$1.75B | +21.9% |
| Cost of Revenue | $912.73M$793.68M | +15.0% |
| Gross Profit | $1.22B$958.61M | +27.4% |
| SG&A Expenses | $348.91M$316.54M | +10.2% |
| Operating Expenses | $696.11M$1.02B | −31.9% |
| Operating Income | $525.34M-$62.97M | +934.3% |
| Interest Expense | $21.66M$3.64M | +495.6% |
| Net Income | $257.69M-$43.42M | +693.5% |
| EPS (Basic) | $1.30$-0.21 | +719.0% |
| EPS (Diluted) | $1.28$-0.21 | +709.5% |
| Shares Outstanding (Basic) | 198.07M202.58M | −2.2% |
| Shares Outstanding (Diluted) | 201.64M202.58M | −0.5% |
05—Questions
Frequently Asked Questions
What were the main drivers of Teradyne's revenue growth in 2017?
Teradyne's revenue growth in 2017 was primarily driven by a strong performance in its Semiconductor Test segment, which saw a 22% increase in revenue. The Industrial Automation segment also contributed significantly with a 72% revenue increase, largely due to the growing demand for collaborative robots. The Wireless Test segment showed a positive recovery with a 16% revenue increase.
What impact did the Tax Cuts and Jobs Act have on Teradyne's 2017 financial results?
The U.S. Tax Cuts and Jobs Act enacted in December 2017 had a significant impact, resulting in a provisional income tax expense of $186.0 million recorded in the fourth quarter of 2017. This expense primarily relates to the one-time transition tax on repatriated foreign earnings and the remeasurement of deferred tax assets and liabilities.
How is Teradyne returning value to shareholders?
Teradyne demonstrated its commitment to shareholder returns by increasing its quarterly cash dividend to $0.09 per share in January 2018. Additionally, in January 2018, the company authorized a new $1.5 billion share repurchase program and intends to repurchase $750 million in 2018, following previous repurchase activities in 2017 and 2016.
What are the key risks highlighted by Teradyne in its 2017 10-K filing?
Key risks highlighted include the cyclical nature of the semiconductor and electronics industries, intense competition, significant customer concentration (with the top five customers accounting for 32% of revenue in 2017), reliance on key customers, operational risks associated with international operations, and the need for continuous technological innovation and new product acceptance. The company also noted potential impacts from supply chain disruptions and the integration of acquired businesses.
06—Continue