10-QPeriod: Q1 FY2020

TERADYNE, INC Quarterly Report for Q1 Ended Mar 29, 2020

Filed May 4, 2020For Securities:TER

Summary

Teradyne, Inc.'s first quarter 2020 results showed a significant increase in revenue and net income compared to the prior year period. Total revenues surged by 42.6% to $704.4 million, driven by strong performance in Semiconductor Test and System Test segments, bolstered by increased demand in mobility, 5G, and memory test markets. Net income also saw a substantial rise of 61.4% to $176.2 million, or $0.97 per diluted share. Despite the overall strong performance, the company noted an increase in operating expenses, including selling and administrative, and engineering and development costs, which rose by 9.2% and 10.9% respectively. The Industrial Automation segment experienced an 8.8% revenue decline, partly attributed to the early impacts of the COVID-19 pandemic on automotive and manufacturing markets. The company also highlighted its proactive measures to protect its workforce and operations amidst the evolving COVID-19 situation, while maintaining liquidity and a strong balance sheet, including the establishment of a new revolving credit facility.

Financial Highlights

51 data points
Beta

Revenue

$704.36M

57.6% Gross Margin

Net Income

$176.19M

25.0% Net Margin

EPS (Diluted)

$0.97

Total Assets

$2.82B

Cash & Equivalents

$593.49M

Free Cash Flow

$6.40M

Financial Statements
Beta
Revenue$704.36M
Cost of Revenue$298.81M
Gross Profit$405.55M
SG&A Expenses$111.39M
Operating Expenses$198.83M
Operating Income$206.72M
Interest Expense$5.55M
Net Income$176.19M
EPS (Basic)$1.06
EPS (Diluted)$0.97
Shares Outstanding (Basic)166.59M
Shares Outstanding (Diluted)180.74M

Key Highlights

  • 1Total revenues increased by 42.6% to $704.4 million in Q1 2020 compared to Q1 2019.
  • 2Net income increased by 61.4% to $176.2 million, with diluted EPS rising to $0.97 from $0.62.
  • 3Semiconductor Test revenue grew significantly by 42.1% driven by mobility, 5G, and memory test demand.
  • 4System Test revenue nearly doubled (99.5% increase) due to higher sales in Storage Test and Defense/Aerospace.
  • 5Industrial Automation revenue declined by 8.8%, impacted by early effects of COVID-19.
  • 6Operating expenses increased, with Selling and Administrative up 9.2% and Engineering & Development up 10.9%.
  • 7The company maintained strong liquidity with $905.0 million in cash and cash equivalents and marketable securities as of March 29, 2020.

Frequently Asked Questions

Teradyne reported a substantial increase in total revenues for the first quarter of 2020, reaching $704.4 million, a 42.6% increase compared to $494.1 million in the first quarter of 2019. This growth was primarily driven by strong performance in the Semiconductor Test and System Test segments.

The COVID-19 pandemic began to impact Teradyne in the first quarter of 2020, primarily affecting the Industrial Automation segment with decreased demand. Management noted that the full impact of the pandemic was still uncertain but that the company had implemented measures to protect employees and maintain liquidity. While Semiconductor and System Test segments showed strength, the Industrial Automation business experienced a decline.

Profitability improved significantly. Net income for the first quarter of 2020 was $176.2 million, a 61.4% increase from $109.1 million in the first quarter of 2019. Diluted earnings per share rose to $0.97 from $0.62.

While Semiconductor Test and System Test showed strong demand, particularly driven by mobility, 5G, and memory, the Industrial Automation segment experienced a decline attributed partly to COVID-19. The company is monitoring the evolving situation, but anticipates continued uncertainty, especially in the Industrial Automation business. Teradyne highlighted its ability to manage its business through demand fluctuations and maintain liquidity.