10-QPeriod: Q3 FY2023

TERADYNE, INC Quarterly Report for Q3 Ended Jul 2, 2023

Filed August 4, 2023For Securities:TER

Summary

Teradyne, Inc. (TER) reported its second quarter and first half 2023 financial results, indicating a notable decrease in revenue compared to the prior year, primarily driven by a slowdown in the Semiconductor Test and Robotics segments. For the three months ended July 2, 2023, total revenues were $684.4 million, down from $840.8 million in the same period last year. Net income for the quarter was $120.1 million, or $0.73 per diluted share, compared to $197.8 million, or $1.16 per diluted share, in the prior year. Despite the revenue decline, the company is strategically investing in its Robotics segment and focused on gaining market share in its test businesses. Teradyne's balance sheet remains solid, with $613.2 million in cash and cash equivalents as of July 2, 2023. The company also continues to return capital to shareholders through dividends and share repurchases, though the pace of repurchases has slowed in the current year compared to 2022. Management notes ongoing supply chain constraints, primarily impacting the test businesses, which are factored into future revenue forecasts.

Financial Highlights

50 data points
Beta

Revenue

$684.44M

58.8% Gross Margin

Net Income

$120.05M

17.5% Net Margin

EPS (Diluted)

$0.73

Total Assets

$3.39B

Cash & Equivalents

$613.21M

Free Cash Flow

$103.51M

Financial Statements
Beta
Revenue$684.44M
Cost of Revenue$281.94M
Gross Profit$402.49M
SG&A Expenses$145.69M
Operating Expenses$262.58M
Operating Income$139.91M
Interest Expense$1.04M
Net Income$120.05M
EPS (Basic)$0.78
EPS (Diluted)$0.73
Shares Outstanding (Basic)154.76M
Shares Outstanding (Diluted)164.75M

Key Highlights

  • 1Total revenues for Q2 2023 decreased by 18.5% to $684.4 million compared to $840.8 million in Q2 2022.
  • 2Net income for Q2 2023 decreased by 39.3% to $120.1 million, with diluted EPS of $0.73, down from $197.8 million and $1.16 respectively in Q2 2022.
  • 3The Semiconductor Test segment experienced a revenue decline of 12.3% ($66.6 million), attributed to lower tester sales for Mobility applications.
  • 4The Robotics segment saw a significant revenue decrease of 29.2% ($29.5 million), impacted by softening global industrial activity and macroeconomic headwinds.
  • 5Gross profit margin for Q2 2023 was 58.8%, a slight decrease from 60.2% in Q2 2022, primarily due to lower volume.
  • 6The company maintained a strong liquidity position with $613.2 million in cash and cash equivalents as of July 2, 2023.
  • 7Teradyne repurchased $227.8 million of common stock in the first six months of 2023, a decrease from $532.8 million in the same period of 2022.

Frequently Asked Questions

The primary reason for the revenue decline in the second quarter of 2023 is a market correction cycle in the Semiconductor Test business, driven by excess semiconductor inventory, particularly in the mobility segment. Additionally, the Robotics segment experienced softening demand due to slowing global industrial activity and macroeconomic headwinds.

Teradyne reported $613.2 million in cash and cash equivalents as of July 2, 2023. The company is balancing capital allocation between returning capital to shareholders through dividends and stock repurchases, and investing in its Robotics businesses. While stock repurchases continued, they were at a slower pace in the first half of 2023 compared to the prior year.

While the current demand is impacted by a correction cycle, Teradyne anticipates future demand drivers in its Semiconductor Test business to include the ramp of 3-nanometer and gate-all-around process technologies, increasing multi-chip packaging, and overall unit growth. Growth in automotive demand and memory test for data center applications (DDR5 and HBM) are partially offsetting current declines.

Yes, Teradyne continues to experience supply chain constraints, although improvements are being seen. These constraints are impacting lead times and costs for certain components and are projected to affect revenue in the third quarter of 2023, with an estimated $35 million in revenue primarily from the test businesses excluded from the forecast due to these issues.