10-QPeriod: Q3 FY2015

TERADYNE, INC Quarterly Report for Q3 Ended Jul 5, 2015

Filed August 14, 2015For Securities:TER

Summary

Teradyne, Inc. reported its financial results for the second quarter and first six months ended July 5, 2015. The company demonstrated solid revenue growth driven by its Semiconductor Test and System Test segments, with System Test showing a significant increase. Notably, the company completed the acquisition of Universal Robots A/S in June 2015, adding a new Industrial Automation segment and enhancing its growth potential. Financially, Teradyne saw an increase in gross profit margin due to improved product mix and sales of previously leased testers, although this was partially offset by higher provisions for excess and obsolete inventory. Operating expenses saw a modest increase in R&D, while SG&A remained relatively flat. The company also announced a new $350 million revolving credit facility, demonstrating its commitment to maintaining strong liquidity. Shareholder returns were supported by $128.3 million in stock repurchases and $25.9 million in dividend payments for the first six months of the year.

Financial Highlights

51 data points
Beta

Revenue

$512.74M

58.2% Gross Margin

Net Income

$102.88M

20.1% Net Margin

EPS (Diluted)

$0.48

Total Assets

$2.69B

Cash & Equivalents

$300.69M

Free Cash Flow

$130.96M

Financial Statements
Beta
Revenue$512.74M
Cost of Revenue$214.17M
Gross Profit$298.57M
SG&A Expenses$77.07M
Operating Expenses$167.78M
Operating Income$130.79M
Interest Expense$444K
Net Income$102.88M
EPS (Basic)$0.48
EPS (Diluted)$0.48
Shares Outstanding (Basic)213.84M
Shares Outstanding (Diluted)215.50M

Key Highlights

  • 1Acquisition of Universal Robots A/S for approximately $284 million in cash, establishing the Industrial Automation segment and adding collaborative robot capabilities.
  • 2Total revenues for the six months ended July 5, 2015, increased by 1% to $855.1 million compared to $846.6 million for the same period in 2014.
  • 3Gross profit margin improved to 58.2% in Q2 2015 from 55.3% in Q2 2014, driven by product mix and sales of previously leased equipment.
  • 4Significant increase in System Test revenue, up 29% in Q2 2015 and 13% for the first six months, primarily from Storage Test segment for cloud storage applications.
  • 5A new five-year, $350 million senior secured revolving credit facility was entered into on April 27, 2015, providing enhanced liquidity.
  • 6Shareholders were returned capital through $128.3 million in stock repurchases and $25.9 million in dividend payments during the first six months of 2015.

Frequently Asked Questions

The acquisition of Universal Robots A/S was completed on June 11, 2015, for approximately $284 million in cash plus potential future payments. This acquisition created Teradyne's new Industrial Automation segment and contributed $3.7 million in revenue and a loss of $1.7 million from operations in the period from its acquisition date to July 5, 2015. The acquisition also added $226.5 million in goodwill and significant intangible assets.

For the first six months of 2015, Semiconductor Test revenue slightly decreased by 2% to $671.2 million. Wireless Test revenue increased by 8% to $96.9 million, and System Test revenue grew by 13% to $83.3 million. The new Industrial Automation segment contributed $3.7 million in revenue.

Teradyne assesses inventory value quarterly, identifying obsolete and excess inventory. In the first six months of 2015, $15.9 million was provided for excess and obsolete inventory, primarily related to 2.5" hard disk drive testers and product transitions in Semiconductor Test. This provision impacted cost of revenues.

Teradyne ended the period with $1,029 million in cash, cash equivalents, and marketable securities. The company has access to a new $350 million revolving credit facility. For the first six months of 2015, Teradyne returned capital to shareholders through $128.3 million in stock repurchases and $25.9 million in dividend payments, reflecting a commitment to shareholder value while maintaining sufficient liquidity.