01—Abstract
Summary
Summary of the 10-K filed March 1, 2019. Cited figures are marked; the original filing is the authoritative source.
Teradyne, Inc.'s 2018 Form 10-K filing highlights a company navigating diverse markets within test automation and industrial automation.
The company experienced a slight revenue dip in 2018 compared to 2017, primarily driven by a decline in the Semiconductor Test segment's mobility and microcontroller test sales, though growth in memory and analog segments, along with increased service revenues, provided some offset. The Industrial Automation segment showed robust growth, fueled by increased demand for collaborative robotic arms and the recent acquisitions of MiR and Energid. Key risk factors include the cyclical nature of the semiconductor and electronics industries, intense competition, and significant customer concentration, with a single OEM and its supply partners contributing a notable portion of revenue.
Despite these challenges, Teradyne continues to invest in product development and strategic acquisitions, expanding its Industrial Automation capabilities. The company's financial position remained solid, with significant cash and marketable securities, and it continued its share repurchase program and dividend payments.
02—Key points
Key Highlights
- Revenue for 2018 was $2.10 billion, a slight decrease from $2.14 billion in 2017, primarily due to a slowdown in Semiconductor Test (down 10%), partially offset by strong growth in Industrial Automation (up 54%).
- Industrial Automation segment revenue grew significantly due to higher demand for collaborative robots and the acquisitions of Mobile Industrial Robots (MiR) and Energid Technologies.
- The company faces significant customer concentration risk, with a single OEM and its supply chain accounting for approximately 13% of 2018 revenues, a decrease from 22% in 2017 and 26% in 2016.
- Backlog at the end of 2018 was $568.7 million, a decrease from $626.4 million in 2017, indicating a potential softening in near-term demand, particularly in Semiconductor Test.
- Teradyne continued its capital allocation strategy by repurchasing approximately $823.5 million of common stock in 2018 and paying $67.3 million in dividends.
- Goodwill and intangible asset impairment charges were significant in 2016 related to the Wireless Test segment, but no such impairments were recorded in 2017 or 2018.
- The company adopted new revenue recognition standards (ASC 606) in 2018, which impacted reported revenues and expenses due to timing differences.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2018, Teradyne, Inc kept $0.22.
- Revenue$2.10B100.0%
- Cost of revenue−$880.4M41.9%
- Gross profit$1.22B58.1%
- Operating costs−$746.6M35.5%
- Operating income$473.8M22.6%
- Interest, other & tax−$22.0M1.0%
- Net income$451.8M21.5%
Where FY2018 revenue went
$2.10B- Cost of revenue: $880.4M, 42% of revenue
- Net income: $451.8M, 22% of revenue
- SG&A: $390.7M, 19% of revenue
- Other operating costs: $355.9M, 17% of revenue
- Interest, other & tax: $22.0M, 1.0% of revenue
Kept 22% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2018filed March 1, 2019Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $2.10B$2.14B | −1.7% |
| Cost of Revenue | $880.41M$912.73M | −3.5% |
| Gross Profit | $1.22B$1.22B | −0.1% |
| SG&A Expenses | $390.67M$348.91M | +12.0% |
| Operating Expenses | $746.60M$696.11M | +7.3% |
| Operating Income | $473.80M$525.34M | −9.8% |
| Interest Expense | $21.78M$21.66M | +0.5% |
| Net Income | $451.78M$257.69M | +75.3% |
| EPS (Basic) | $2.41$1.30 | +85.4% |
| EPS (Diluted) | $2.35$1.28 | +83.6% |
| Shares Outstanding (Basic) | 187.67M198.07M | −5.2% |
| Shares Outstanding (Diluted) | 192.60M201.64M | −4.5% |
05—Questions
Frequently Asked Questions
What were the primary drivers of Teradyne's revenue performance in 2018?
Teradyne's revenue in 2018 was primarily driven by the Semiconductor Test segment, which, despite a 10% decline in mobility and microcontroller test sales, saw increased demand in memory and analog segments. The Industrial Automation segment was a significant growth engine, up 54% due to strong demand for collaborative robots and the strategic acquisitions of MiR and Energid.
What are the key risks facing Teradyne, as highlighted in the filing?
Teradyne faces several key risks, including the cyclical nature of the semiconductor and electronics industries, which can lead to unpredictable demand. Intense competition from both established players and emerging Asian companies is another significant factor. Furthermore, the company's reliance on a few large customers presents concentration risk, where a slowdown or loss of a major customer could materially impact financial results.
How did Teradyne manage its capital in 2018?
In 2018, Teradyne continued its focus on capital allocation. The company repurchased approximately $823.5 million of its common stock under an authorized $1.5 billion program and paid out $67.3 million in cash dividends to shareholders. This indicates a commitment to returning value to shareholders while investing in strategic growth areas.
What impact did recent acquisitions have on Teradyne's financial results?
The acquisitions of Mobile Industrial Robots (MiR) and Energid Technologies in 2018 significantly boosted the Industrial Automation segment's revenue and contributed to goodwill and intangible assets. While these acquisitions represent a strategic growth area, they also increase amortization expenses. The company's overall strategy involves integrating these businesses to enhance its market position in industrial automation.
06—Continue