10-QPeriod: Q2 FY2016

TERADYNE, INC Quarterly Report for Q2 Ended Apr 3, 2016

Filed May 13, 2016For Securities:TER

Summary

Teradyne, Inc. reported a strong first quarter for 2016, with total revenues increasing by 25.7% to $431.0 million compared to the prior year period. This growth was primarily driven by a significant rebound in the Semiconductor Test segment, bolstered by strong demand in application processor and image sensor markets, and supplemented by the recent acquisition of Universal Robots, which contributed $16.7 million in revenue to the new Industrial Automation segment. The company demonstrated solid operational execution, with income from operations increasing to $56.1 million from $35.1 million year-over-year, reflecting improved gross margins and efficient management of operating expenses despite increased R&D and SG&A associated with the acquisition. Despite a notable decrease in revenue from the Wireless Test segment due to customer-specific factors, the overall performance showcases Teradyne's diversified business model and its ability to capitalize on market demand. The company's balance sheet remains robust, with a healthy cash and equivalents and marketable securities balance of over $975 million. Teradyne also continued its commitment to shareholder returns through active share repurchase programs and dividend payments. The outlook appears positive, supported by continued investment in technology and market expansion, although the company acknowledged potential disruptions from the recent earthquake in Japan.

Financial Highlights

51 data points
Beta

Revenue

$430.99M

53.4% Gross Margin

Net Income

$49.99M

11.6% Net Margin

EPS (Diluted)

$0.24

Total Assets

$2.55B

Cash & Equivalents

$319.36M

Free Cash Flow

$15.39M

Financial Statements
Beta
Revenue$430.99M
Cost of Revenue$200.66M
Gross Profit$230.33M
SG&A Expenses$79.17M
Operating Expenses$174.22M
Operating Income$56.11M
Interest Expense$710K
Net Income$49.99M
EPS (Basic)$0.24
EPS (Diluted)$0.24
Shares Outstanding (Basic)204.27M
Shares Outstanding (Diluted)205.73M

Key Highlights

  • 1Total revenues increased significantly by 25.7% to $431.0 million in Q1 2016 compared to Q1 2015.
  • 2Semiconductor Test segment revenue saw a substantial increase of 25.6% to $340.3 million, driven by demand in key markets.
  • 3The recently acquired Universal Robots contributed $16.7 million in revenue to the new Industrial Automation segment.
  • 4Income from operations more than doubled to $56.1 million from $35.1 million in the prior year period.
  • 5Despite a decrease in Wireless Test revenues, overall gross profit increased by $37.9 million.
  • 6The company maintained a strong liquidity position with $975.4 million in cash, cash equivalents, and marketable securities.
  • 7Teradyne returned capital to shareholders through $28.0 million in share repurchases and $12.3 million in dividend payments during the quarter.

Frequently Asked Questions

The primary driver of Teradyne's revenue growth in Q1 2016 was a significant increase in the Semiconductor Test segment, which saw revenue rise by 25.6% to $340.3 million. This growth was fueled by higher product volumes in the application processor and image sensor markets. Additionally, the recent acquisition of Universal Robots contributed $16.7 million in revenue to the newly formed Industrial Automation segment.

The acquisition of Universal Robots, completed in June 2015, contributed $16.7 million to Teradyne's total revenues in Q1 2016, establishing the Industrial Automation segment. While it added to revenue, it also increased operating expenses, including amortization of acquired intangible assets and selling and administrative costs. Teradyne also recorded a $1.2 million expense related to the increase in the fair value of contingent consideration for Universal Robots in Q1 2016.

The Wireless Test segment experienced a significant revenue decrease of 40.5% to $20.3 million. This was primarily due to lower cellular test system sales, specifically to their largest customer in this segment. Management noted that revenue in this segment is subject to fluctuations based on the largest customer's test capacity plans due to significant customer concentration. While this quarter showed a decline, the company's overall diversification helps mitigate the impact.

Teradyne ended the quarter with a strong liquidity position, holding $975.4 million in cash, cash equivalents, and marketable securities. During Q1 2016, the company returned capital to shareholders by repurchasing $28.0 million of common stock and paying $12.3 million in dividends. Teradyne also indicated plans to repurchase between $100 million and $200 million of common stock in 2016.