10-QPeriod: Q3 FY2012

TERADYNE, INC Quarterly Report for Q3 Ended Jul 1, 2012

Filed August 10, 2012For Securities:TER

Summary

Teradyne, Inc. reported solid revenue growth for the second quarter of 2012, driven by strong performance in its Semiconductor Test segment and the significant contribution from the recently acquired LitePoint (Wireless Test segment). Total net revenues increased by 33.6% year-over-year to $548.3 million. Profitability also saw a substantial improvement, with gross profit margin expanding to 56.4% from 52.3% in the prior year's quarter. This margin expansion was largely attributed to the higher-margin revenue from LitePoint and improved operational efficiencies. Net income for the quarter rose to $111.4 million ($0.49 per diluted share) from $87.3 million ($0.38 per diluted share) in the same period last year. The company's balance sheet remains strong, with a healthy cash and cash equivalents and marketable securities balance of $828.8 million as of July 1, 2012.

Financial Highlights

48 data points
Beta

Revenue

$463.39M

56.2% Gross Margin

Net Income

$88.64M

19.1% Net Margin

EPS (Diluted)

$0.39

Total Assets

$2.46B

Cash & Equivalents

$485.69M

Free Cash Flow

$287.01M

Financial Statements
Beta
Revenue$463.39M
Cost of Revenue$203.19M
Gross Profit$260.20M
SG&A Expenses$69.03M
Operating Expenses$152.09M
Operating Income$108.11M
Interest Expense$6.15M
Net Income$88.64M
EPS (Basic)$0.47
EPS (Diluted)$0.39
Shares Outstanding (Basic)187.36M
Shares Outstanding (Diluted)229.21M

Key Highlights

  • 1Total net revenues increased 33.6% to $548.3 million in Q2 2012 compared to $410.5 million in Q2 2011.
  • 2Gross profit margin improved significantly to 56.4% in Q2 2012, up from 52.3% in Q2 2011, primarily due to the LitePoint acquisition.
  • 3Net income grew to $111.4 million ($0.49 per diluted share) in Q2 2012, up from $87.3 million ($0.38 per diluted share) in Q2 2011.
  • 4The Semiconductor Test segment revenue grew 6% year-over-year, driven by System-on-a-Chip products.
  • 5The Wireless Test segment, comprised of the acquired LitePoint, contributed $111.9 million in revenue for the quarter.
  • 6The company maintained a strong liquidity position with $828.8 million in cash, cash equivalents, and marketable securities as of July 1, 2012.

Frequently Asked Questions

The acquisition of LitePoint (Wireless Test segment) significantly boosted Teradyne's top-line revenue, contributing $111.9 million in the second quarter of 2012. It also positively impacted gross profit margin due to its higher margin profile, and increased operating expenses related to engineering and selling & administrative functions.

The Semiconductor Test segment showed resilience, with revenue increasing by 6% year-over-year, primarily driven by System-on-a-Chip product revenue, though partially offset by a decrease in memory product revenue. The book-to-bill ratio for this segment was 1.0, indicating solid demand.

Teradyne recorded an inventory provision of $9.4 million in Q2 2012 due to declining demand for certain products and product transitions. While this impacted cost of revenues, the company actively assesses inventory carrying values quarterly to identify obsolete and excess inventory.

Teradyne has $190 million in convertible senior notes maturing in March 2014. As of the reporting date, holders had the option to convert due to stock price performance exceeding certain thresholds, but no conversions had been exercised. The company has convertible note hedge and warrant transactions in place to mitigate dilution.