10-QPeriod: Q2 FY2019

TERADYNE, INC Quarterly Report for Q2 Ended Jun 30, 2019

Filed August 9, 2019For Securities:TER

Summary

Teradyne, Inc. (TER) reported solid revenue growth in the second quarter of 2019, with total revenues increasing by 7.1% year-over-year to $564.2 million. This growth was primarily driven by strong performance in the Semiconductor Test and Industrial Automation segments. Semiconductor Test revenue saw a 4.1% increase due to demand for 5G infrastructure and services, while Industrial Automation experienced a significant 20.3% jump, bolstered by new product demand and the recent acquisition of Mobile Industrial Robots (MiR). Despite revenue growth, gross profit margin saw a slight decrease to 57.4% from 58.3% in the prior year, mainly due to higher inventory provisions and an unfavorable product mix in the Semiconductor Test segment. Operating expenses increased, particularly in selling and administrative, and engineering and development, largely driven by investments in the Industrial Automation segment. Net income for the quarter was $97.4 million, a slight decrease from $101.0 million in the prior year, resulting in diluted EPS of $0.55 compared to $0.52. The company continued its capital return program, repurchasing shares and paying dividends, indicating confidence in its financial position and future prospects.

Financial Highlights

51 data points
Beta

Revenue

$564.18M

57.4% Gross Margin

Net Income

$97.40M

17.3% Net Margin

EPS (Diluted)

$0.55

Total Assets

$2.67B

Cash & Equivalents

$495.11M

Free Cash Flow

$112.01M

Financial Statements
Beta
Revenue$564.18M
Cost of Revenue$240.26M
Gross Profit$323.92M
SG&A Expenses$108.81M
Operating Expenses$189.92M
Operating Income$133.99M
Interest Expense$5.80M
Net Income$97.40M
EPS (Basic)$0.57
EPS (Diluted)$0.55
Shares Outstanding (Basic)171.24M
Shares Outstanding (Diluted)178.59M

Key Highlights

  • 1Total revenues increased by 7.1% to $564.2 million in Q2 2019 compared to Q2 2018.
  • 2Semiconductor Test revenue grew by 4.1% ($14.8 million) driven by 5G demand and services.
  • 3Industrial Automation revenue surged by 20.3% ($12.6 million), benefiting from new products and the MiR acquisition.
  • 4Gross profit margin slightly decreased to 57.4% due to higher inventory provisions and product mix.
  • 5Net income decreased slightly to $97.4 million from $101.0 million in the prior year's quarter.
  • 6Diluted EPS was $0.55, an increase from $0.52 in the prior year's quarter.
  • 7The company actively repurchased shares, spending $247.2 million in the first half of 2019.

Frequently Asked Questions

The primary drivers of revenue growth were the Semiconductor Test segment, which saw increased sales related to 5G infrastructure and services, and the Industrial Automation segment, which experienced significant growth due to demand for collaborative robotic arms and the inclusion of Mobile Industrial Robots (MiR) following its acquisition.

The slight decrease in gross profit margin was mainly attributed to higher inventory provisions, particularly in the Semiconductor Test segment, and an unfavorable product mix that impacted overall profitability.

Teradyne is actively returning value to shareholders through its stock repurchase program, having spent $247.2 million on repurchases in the first half of 2019, and by paying quarterly cash dividends. The company also has a significant cash balance, indicating a strong liquidity position.

The acquisition of Mobile Industrial Robots (MiR) contributed significantly to the revenue growth in the Industrial Automation segment, which increased by 20.3% year-over-year. However, it also led to increased selling and administrative expenses and amortization of acquired intangible assets, impacting overall profitability in that segment.