10-QPeriod: Q2 FY2018

TERADYNE, INC Quarterly Report for Q2 Ended Apr 1, 2018

Filed May 11, 2018For Securities:TER

Summary

Teradyne, Inc. (TER) reported solid financial results for the first quarter of 2018, with total revenues of $487.5 million, an increase of 6.7% compared to the prior year period. This growth was primarily driven by the Semiconductor Test and Industrial Automation segments. Net income for the quarter was $87.0 million, or $0.43 per diluted share, representing a slight increase from the prior year. The company's balance sheet remains strong with $637.9 million in cash and cash equivalents. Teradyne continues to actively return capital to shareholders through share repurchases and dividends, repurchasing $134.3 million of stock and paying $17.6 million in dividends during the quarter. The company also announced the acquisition of Mobile Industrial Robots ApS (MiR) for approximately $148 million, further strengthening its Industrial Automation segment.

Financial Highlights

51 data points
Beta

Revenue

$487.47M

55.4% Gross Margin

Net Income

$86.97M

17.8% Net Margin

EPS (Diluted)

$0.43

Total Assets

$3.00B

Cash & Equivalents

$637.87M

Free Cash Flow

-$116.73M

Financial Statements
Beta
Revenue$487.47M
Cost of Revenue$217.63M
Gross Profit$269.83M
SG&A Expenses$90.50M
Operating Expenses$172.30M
Operating Income$97.53M
Interest Expense$6.89M
Net Income$86.97M
EPS (Basic)$0.45
EPS (Diluted)$0.43
Shares Outstanding (Basic)195.25M
Shares Outstanding (Diluted)203.48M

Key Highlights

  • 1Total revenues increased by 6.7% to $487.5 million, driven by growth in Semiconductor Test and Industrial Automation segments.
  • 2Net income rose slightly to $87.0 million, or $0.43 per diluted share, compared to $85.2 million in the prior year.
  • 3The company maintained a strong liquidity position with $637.9 million in cash and cash equivalents.
  • 4Teradyne returned $151.9 million to shareholders through $134.3 million in stock repurchases and $17.6 million in dividend payments.
  • 5Acquisition of Mobile Industrial Robots ApS (MiR) for approximately $148 million, enhancing the Industrial Automation segment.
  • 6The adoption of ASC 606 (Revenue from Contracts with Customers) had a net positive impact on retained earnings and altered revenue recognition timing for certain contracts.

Frequently Asked Questions

Revenue growth was primarily driven by increased sales in the Semiconductor Test segment, specifically in the flash memory test area, and higher demand for collaborative robotic arms in the Industrial Automation segment. System Test also saw a modest increase due to higher sales in Storage Test.

Teradyne experienced a net decrease in cash and cash equivalents of $81.9 million from operating activities but generated significant cash from investing activities ($462.9 million) through the sale and maturity of marketable securities. Financing activities used $174.4 million, largely for share repurchases and dividend payments. The company ended the quarter with $637.9 million in cash and cash equivalents, indicating a strong liquidity position.

Teradyne adopted ASC 606 on January 1, 2018. The adoption resulted in a net increase of $12.7 million to retained earnings. It has changed the timing of revenue recognition for certain contracts, particularly where acceptance was previously a condition for revenue recognition but is now considered a formality. This has also affected the presentation of revenue and related balance sheet accounts like accounts receivable and deferred revenue.

Teradyne acquired MiR on April 25, 2018, for approximately $148 million (net of cash acquired), with potential additional payments up to $124 million tied to future performance targets. MiR is a leader in collaborative autonomous mobile robots and will be integrated into Teradyne's Industrial Automation segment, bolstering its offerings in this growing market.