10-QPeriod: Q2 FY2017

TERADYNE, INC Quarterly Report for Q2 Ended Apr 2, 2017

Filed May 12, 2017For Securities:TER

Summary

Teradyne, Inc. reported strong first-quarter 2017 results, demonstrating significant year-over-year growth in both revenue and net income. Total revenues increased by 5.9% to $456.9 million, driven by robust performance in the Semiconductor Test and Industrial Automation segments, with the latter experiencing substantial growth due to demand for collaborative robots. The company's profitability saw a notable improvement, with gross profit margin expanding to 58.0% from 53.4% in the prior year, benefiting from a favorable product mix and lower inventory provisions. Net income more than doubled, reaching $85.2 million, or $0.42 per diluted share, compared to $49.9 million, or $0.24 per diluted share, in Q1 2016. This performance reflects effective cost management and operational efficiencies. Teradyne also continued its capital return strategy, repurchasing $37.7 million in stock and paying $14.0 million in dividends, underscoring its commitment to shareholder value.

Financial Highlights

51 data points
Beta

Revenue

$456.91M

58.0% Gross Margin

Net Income

$85.22M

18.7% Net Margin

EPS (Diluted)

$0.42

Total Assets

$2.84B

Cash & Equivalents

$324.75M

Free Cash Flow

-$83.19M

Financial Statements
Beta
Revenue$456.91M
Cost of Revenue$191.90M
Gross Profit$265.02M
SG&A Expenses$84.79M
Operating Expenses$171.23M
Operating Income$93.78M
Interest Expense$5.40M
Net Income$85.22M
EPS (Basic)$0.43
EPS (Diluted)$0.42
Shares Outstanding (Basic)200.00M
Shares Outstanding (Diluted)201.94M

Key Highlights

  • 1Total revenues increased by 5.9% to $456.9 million compared to the prior year quarter.
  • 2Net income surged to $85.2 million, a significant increase from $49.9 million in Q1 2016, resulting in diluted EPS of $0.42.
  • 3Gross profit margin improved to 58.0% from 53.4% year-over-year, driven by a favorable product mix and reduced inventory provisions.
  • 4The Semiconductor Test segment showed a 4.5% revenue increase, while Industrial Automation revenues grew by an impressive 117.4%.
  • 5The company's book-to-bill ratio for the total company was 1.3, indicating strong order intake relative to sales.
  • 6Teradyne continued to return capital to shareholders through $37.7 million in share repurchases and $14.0 million in dividend payments during the quarter.
  • 7The effective tax rate decreased significantly to 7.4% from 12.6% in the prior year, partly due to increased discrete benefits from stock-based compensation.

Frequently Asked Questions

Revenue growth was primarily driven by the Semiconductor Test segment, which saw increased sales in areas like microcontroller, power management, automotive safety, and flash memory testing. Additionally, the Industrial Automation segment experienced substantial growth due to higher demand for collaborative robots.

Teradyne's profitability saw a significant improvement. Gross profit margin increased to 58.0% from 53.4% year-over-year. Net income more than doubled, reaching $85.2 million, or $0.42 per diluted share, from $49.9 million, or $0.24 per diluted share, in the first quarter of 2016.

Teradyne assesses inventory carrying value quarterly by estimating future demand against current inventory. In Q1 2017, the company recorded an inventory provision of $2.7 million, which contributed to the improvement in gross profit margin. This provision was primarily due to downward revisions in forecasted demand levels.

Teradyne repurchased $37.7 million of its common stock during the quarter under a $500 million authorization. The company also paid $14.0 million in quarterly cash dividends. Management indicated that future dividends and repurchases are discretionary and subject to the Board's consideration of earnings, capital requirements, and financial condition.