01—Abstract
Summary
Summary of the 10-K filed March 2, 2020. Cited figures are marked; the original filing is the authoritative source.
Teradyne, Inc. reported solid financial performance in its 2019 10-K filing.
The company, a leading supplier of automation equipment for test and industrial applications, saw revenue growth driven by its Semiconductor Test and System Test businesses, primarily due to demand in China for 5G infrastructure and image sensors, as well as strength in aerospace and defense. While the Industrial Automation segment's growth was below plan, Teradyne made strategic acquisitions in this area, including AutoGuide and MiR, to bolster its position in autonomous mobile robots.
The company's revenue is somewhat concentrated among a few key customers, and it faces risks associated with industry cyclicality, competition, and international operations. Despite these challenges, Teradyne's diverse product portfolio and strategic investments position it for continued development in the evolving automation and testing markets.
02—Key points
Key Highlights
- Teradyne experienced revenue growth in 2019, primarily driven by its Semiconductor Test and System Test segments, with strong performance in China and demand for 5G-related products.
- The company made strategic acquisitions in the Industrial Automation segment, including AutoGuide and MiR, to expand its offerings in autonomous mobile robots, complementing its existing Universal Robots business.
- Despite revenue growth in test businesses, Industrial Automation's growth was below plan, indicating a segment requiring further development or integration.
- Teradyne relies on a limited number of significant customers, creating a concentration risk that could impact future revenues if demand from these customers decreases.
- The company faces significant competition across all its business segments, with some competitors possessing greater financial resources.
- International sales constitute a substantial portion of Teradyne's revenue (85% in 2019), exposing the company to risks related to global economic conditions, currency fluctuations, and geopolitical instability.
- Teradyne reported $810.0 million in backlog at the end of 2019, up from $568.7 million in 2018, indicating strong future order visibility.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2019, Teradyne, Inc kept $0.20.
- Revenue$2.29B100.0%
- Cost of revenue−$955.1M41.6%
- Gross profit$1.34B58.4%
- Operating costs−$786.2M34.3%
- Operating income$553.7M24.1%
- Interest, other & tax−$86.2M3.8%
- Net income$467.5M20.4%
Where FY2019 revenue went
$2.29B- Cost of revenue: $955.1M, 42% of revenue
- Net income: $467.5M, 20% of revenue
- SG&A: $437.1M, 19% of revenue
- Other operating costs: $349.1M, 15% of revenue
- Interest, other & tax: $86.2M, 3.8% of revenue
Kept 20% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2019filed March 2, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $2.29B$2.10B | +9.2% |
| Cost of Revenue | $955.14M$880.41M | +8.5% |
| Gross Profit | $1.34B$1.22B | +9.8% |
| SG&A Expenses | $437.08M$390.67M | +11.9% |
| Operating Expenses | $786.17M$746.60M | +5.3% |
| Operating Income | $553.65M$473.80M | +16.9% |
| Interest Expense | $22.22M$21.78M | +2.0% |
| Net Income | $467.47M$451.78M | +3.5% |
| EPS (Basic) | $2.74$2.41 | +13.7% |
| EPS (Diluted) | $2.60$2.35 | +10.6% |
| Shares Outstanding (Basic) | 170.43M187.67M | −9.2% |
| Shares Outstanding (Diluted) | 179.46M192.60M | −6.8% |
05—Questions
Frequently Asked Questions
What were the main drivers of Teradyne's revenue growth in 2019?
Teradyne's revenue growth in 2019 was primarily driven by its Semiconductor Test and System Test businesses. Key factors included increased demand for semiconductor testers supporting 5G infrastructure and image sensors, as well as strength in the defense/aerospace and storage test markets.
How is Teradyne expanding its Industrial Automation segment?
Teradyne is actively expanding its Industrial Automation segment through strategic acquisitions. Notable acquisitions include Energid Technologies for robotic motion control software, Mobile Industrial Robots (MiR) for autonomous mobile robots, and AutoGuide for high-payload autonomous mobile robots. These acquisitions aim to enhance Teradyne's position in the growing robotics market, complementing its existing Universal Robots business.
What are the key risks facing Teradyne?
Teradyne faces several key risks. These include sensitivity to global and industry-specific economic cycles, intense competition across its segments, customer concentration with a few significant customers, operational risks associated with its international presence and supply chain, and potential impacts from trade regulations and tariffs. The company also noted potential disruptions from health epidemics, such as the coronavirus outbreak.
How does Teradyne manage its backlog, and what does it indicate for the future?
Teradyne reported a backlog of $810.0 million at the end of 2019, an increase from $568.7 million in 2018. While a backlog indicates future revenue potential, the company notes that customers can delay or cancel orders, so the backlog is not necessarily indicative of future sales. However, the significant increase suggests strong demand for its products.
06—Continue