10-QPeriod: Q2 FY2015

TERADYNE, INC Quarterly Report for Q2 Ended Apr 5, 2015

Filed May 8, 2015For Securities:TER

Summary

Teradyne, Inc. reported solid financial results for the first quarter of 2015, demonstrating a significant rebound from the prior year period. Total revenues increased by 6.6% year-over-year to $342.4 million, driven by strong performance in the Semiconductor Test and Wireless Test segments. The company achieved a substantial improvement in profitability, with net income soaring to $32.8 million ($0.15 per diluted share) from just $0.9 million ($0.00 per diluted share) in the first quarter of 2014. This improved profitability was supported by a higher gross profit margin and effectively managed operating expenses, despite increased R&D investments. From a balance sheet perspective, Teradyne maintained a strong liquidity position with cash and cash equivalents and marketable securities totaling approximately $1.27 billion. The company also initiated a significant share repurchase program and continued to pay quarterly dividends, reflecting confidence in its financial health and commitment to returning value to shareholders. The acquisition of Avionics Interface Technologies (AIT) in late 2014 is expected to complement the System Test segment's offerings.

Financial Highlights

50 data points
Beta

Revenue

$342.40M

56.2% Gross Margin

Net Income

$32.79M

9.6% Net Margin

EPS (Diluted)

$0.15

Total Assets

$2.51B

Cash & Equivalents

$218.94M

Free Cash Flow

$16.38M

Financial Statements
Beta
Revenue$342.40M
Cost of Revenue$149.98M
Gross Profit$192.42M
SG&A Expenses$72.04M
Operating Expenses$157.30M
Operating Income$35.12M
Interest Expense$162K
Net Income$32.79M
EPS (Basic)$0.15
EPS (Diluted)$0.15
Shares Outstanding (Basic)217.19M
Shares Outstanding (Diluted)218.81M

Key Highlights

  • 1Revenue increased by 6.6% to $342.4 million compared to the prior year quarter.
  • 2Net income saw a dramatic increase to $32.8 million, or $0.15 per diluted share, from $0.9 million, or $0.00 per diluted share, in the prior year quarter.
  • 3Gross profit margin improved to 56.2% from 52.0% in the prior year quarter.
  • 4The Semiconductor Test and Wireless Test segments drove revenue growth.
  • 5The company held a strong liquidity position with over $1.27 billion in cash and marketable securities.
  • 6Teradyne repurchased $46.7 million of common stock and paid $13.0 million in dividends.
  • 7An acquisition of Avionics Interface Technologies (AIT) in October 2014 was integrated into the System Test segment.

Frequently Asked Questions

The substantial increase in net income was primarily driven by higher revenues, a significant improvement in gross profit margin to 56.2% (up from 52.0%), and effective management of operating expenses, including a decrease in selling and administrative costs due to a one-time charge in the prior year's quarter.

Teradyne's combined cash, cash equivalents, and marketable securities decreased by $27.9 million to approximately $1.27 billion. This was primarily due to investing activities, including purchases of marketable securities and property, plant, and equipment, and financing activities such as share repurchases and dividend payments, which more than offset cash generated from operating activities.

The company saw revenue growth in the Semiconductor Test segment (up 4%) primarily due to higher system-on-a-chip (SOC) product sales, and a substantial increase in the Wireless Test segment (up 61%) driven by higher cellular system sales. The System Test segment experienced a slight decrease in revenue. The book-to-bill ratio for the total company remained strong at 1.4, indicating healthy demand.

Teradyne is actively returning value to shareholders through a new $500 million stock repurchase program, of which $46.7 million was utilized in the first quarter, and by continuing to pay a quarterly cash dividend of $0.06 per share.