10-QPeriod: Q1 FY2014

TERADYNE, INC Quarterly Report for Q1 Ended Mar 30, 2014

Filed May 7, 2014For Securities:TER

Summary

Teradyne, Inc. reported its first-quarter 2014 financial results, with total net revenues reaching $321.0 million, a 14.5% increase compared to the same period last year. This growth was primarily driven by a strong performance in the Semiconductor Test segment, which saw a 24% revenue increase year-over-year, largely due to higher system-on-a-chip (SOC) product volume. However, the Wireless Test segment experienced a significant revenue decline of 37%, impacting overall profitability. The company reported a net income of $0.9 million, or $0.00 per diluted share, a substantial decrease from $6.6 million, or $0.03 per diluted share, in the first quarter of 2013. This decline was influenced by several factors including increased cost of revenues, higher operating expenses, particularly a one-time stock-based compensation charge related to the former CEO's retirement, and a reduction in income tax benefit due to the non-recurrence of a significant R&D tax credit from the prior year. Despite the profitability drop, Teradyne's balance sheet remains solid with $966.8 million in cash, cash equivalents, and marketable securities.

Financial Highlights

50 data points
Beta

Revenue

$321.01M

52.0% Gross Margin

Net Income

$929K

0.3% Net Margin

EPS (Diluted)

$0.00

Total Assets

$2.43B

Cash & Equivalents

$232.63M

Free Cash Flow

-$57.02M

Financial Statements
Beta
Revenue$321.01M
Cost of Revenue$153.96M
Gross Profit$167.05M
SG&A Expenses$78.00M
Operating Expenses$163.36M
Operating Income$3.69M
Interest Expense$6.42M
Net Income$929K
Shares Outstanding (Basic)193.31M
Shares Outstanding (Diluted)236.48M

Key Highlights

  • 1Total net revenues increased by 14.5% to $321.0 million, driven by the Semiconductor Test segment.
  • 2Semiconductor Test segment revenue grew by 24% year-over-year, primarily due to increased SOC product volume.
  • 3Wireless Test segment revenue declined significantly by 37% ($12.4 million).
  • 4Net income decreased substantially to $0.9 million from $6.6 million in the prior year's quarter.
  • 5Diluted earnings per share were $0.00, down from $0.03 in Q1 2013.
  • 6The company declared its initial quarterly cash dividend of $0.06 per share.
  • 7Total operating expenses increased, notably due to a $6.6 million stock-based compensation charge for the former CEO's retirement agreement.

Frequently Asked Questions

The primary driver of revenue growth was the Semiconductor Test segment, which saw a 24% increase in revenue year-over-year, primarily attributed to higher system-on-a-chip (SOC) product volume.

The decrease in net income and EPS was due to several factors, including higher cost of revenues (partly from increased inventory provisions), increased operating expenses (notably a one-time stock-based compensation charge of $6.6 million related to the former CEO's retirement), and a lower income tax benefit, as the significant R&D tax credit benefit from Q1 2013 did not recur.

Teradyne maintained a strong liquidity position with $966.8 million in cash, cash equivalents, and marketable securities as of March 30, 2014. Management believes this balance is sufficient to meet working capital and expenditure needs for at least the next twelve months. The company also declared its first quarterly cash dividend of $0.06 per share.

Yes, the company completed the repayment of its 4.50% convertible senior notes maturing in March 2014. This involved a net share settlement where Teradyne paid approximately $190 million in cash and issued 25.1 million shares of common stock. Financing activities also included the payment of $191.0 million towards long-term debt, including these convertible notes and the Japan loan.