- Revenue of
$567 million , organic growth of 11% from Q3’17 - Memory Test Q3’18 revenue of
$87 million , up 83% from Q3’17 - Universal Robots revenue up 46% from Q3’17, Industrial Automation segment revenue up 64%
Q3’18 | Q2’18 | Q3’17 | ||||
Revenue (mil) | $567 | $527 | $503 | |||
GAAP EPS | $0.63 | $0.52 | $0.52 | |||
Non-GAAP EPS | $0.71 | $0.59 | $0.54 |
"Increased third quarter sales, combined with favorable product mix, drove earnings above our guidance," said President and CEO
With expected strong Industrial Automation and Semiconductor Test shipments, the mid-point of our Q4 guidance delivers another year with over
Guidance for the fourth quarter of 2018 is revenue of
Webcast
A conference call to discuss the third quarter results, along with management's business outlook, will follow at
A replay will be available on the
Non-GAAP Results
In addition to disclosing results that are determined in accordance with GAAP,
About
Safe Harbor Statement
This release contains forward-looking statements regarding Teradyne’s future business prospects, results of operations, market conditions, earnings per share, the payment of a quarterly dividend, the repurchase of
TERADYNE, INC. REPORT FOR THIRD FISCAL QUARTER OF 2018 | |||||||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||||||||
(In thousands, except per share amounts) | |||||||||||||||||||||||||
Quarter Ended | Nine Months Ended | ||||||||||||||||||||||||
September 30, 2018 |
July 1, 2018 |
October 1, 2017 (1) |
September 30, 2018 |
October 1, 2017 (1) |
|||||||||||||||||||||
Net revenues | $ | 566,848 | $ | 526,929 | $ | 503,378 | $ | 1,581,244 | $ | 1,657,191 | |||||||||||||||
Cost of revenues (exclusive of acquired intangible assets amortization shown separately below) (2) | 233,155 | 219,595 | 208,509 | 670,385 | 706,667 | ||||||||||||||||||||
Gross profit | 333,693 | 307,334 | 294,869 | 910,859 | 950,524 | ||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||
Selling and administrative | 100,199 | 99,410 | 86,130 | 290,115 | 261,034 | ||||||||||||||||||||
Engineering and development | 77,049 | 75,342 | 76,986 | 226,799 | 235,235 | ||||||||||||||||||||
Acquired intangible assets amortization | 11,142 | 9,793 | 7,028 | 28,633 | 23,145 | ||||||||||||||||||||
Restructuring and other (3) | 1,710 | 2,389 | (4,407 | ) | 3,785 | 392 | |||||||||||||||||||
Operating expenses | 190,100 | 186,934 | 165,737 | 549,332 | 519,806 | ||||||||||||||||||||
Income from operations | 143,593 | 120,400 | 129,132 | 361,527 | 430,718 | ||||||||||||||||||||
Interest and other (4) | (2,749 | ) | (388 | ) | (1,695 | ) | (4,852 | ) | (4,389 | ) | |||||||||||||||
Income before income taxes | 140,844 | 120,012 | 127,437 | 356,675 | 426,329 | ||||||||||||||||||||
Income tax provision | 20,863 | 18,975 | 24,017 | 48,684 | 62,713 | ||||||||||||||||||||
Net income | $ | 119,981 | $ | 101,037 | $ | 103,420 | $ | 307,991 | $ | 363,616 | |||||||||||||||
Net income per common share: | |||||||||||||||||||||||||
Basic | $ | 0.65 | $ | 0.53 | $ | 0.52 | $ | 1.62 | $ | 1.83 | |||||||||||||||
Diluted | $ | 0.63 | $ | 0.52 | $ | 0.52 | $ | 1.57 | $ | 1.81 | |||||||||||||||
Weighted average common shares - basic | 185,744 | 190,730 | 197,485 | 190,576 | 198,755 | ||||||||||||||||||||
Weighted average common shares - diluted (5) | 190,505 | 194,909 | 200,775 | 196,300 | 201,413 | ||||||||||||||||||||
Cash dividend declared per common share | $ | 0.09 | $ | 0.09 | $ | 0.07 | $ | 0.27 | $ | 0.21 | |||||||||||||||
(1) | Certain prior period amounts were reclassified to conform with the first quarter 2018 adoption of new accounting guidance for the presentation of pension and post retirement costs. | ||||||||||||||||||||||||
(2) | Cost of revenues includes: | Quarter Ended | Nine Months Ended | ||||||||||||||||||||||
September 30, 2018 |
July 1, 2018 |
October 1, 2017 |
September 30, 2018 |
October 1, 2017 |
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Provision for excess and obsolete inventory | $ | 3,347 | $ | 2,653 | $ | 1,859 | $ | 9,522 | $ | 7,154 | |||||||||||||||
Sale of previously written down inventory | (1,013 | ) | (1,922 | ) | (3,121 | ) | (5,178 | ) | (6,404 | ) | |||||||||||||||
$ | 2,334 | $ | 731 | $ | (1,262 | ) | $ | 4,344 | $ | 750 | |||||||||||||||
(3) | Restructuring and other consists of: | Quarter Ended | Nine Months Ended | ||||||||||||||||||||||
September 30, 2018 |
July 1, 2018 |
October 1, 2017 |
September 30, 2018 |
October 1, 2017 |
|||||||||||||||||||||
Employee severance | $ | 1,667 | $ | 2,398 | $ | 581 | $ | 7,945 | $ | 1,953 | |||||||||||||||
Acquisition related expenses and compensation | 811 | 2,544 | - | 4,129 | - | ||||||||||||||||||||
Contingent consideration fair value adjustment | (768 | ) | (3,500 | ) | (286 | ) | (9,236 | ) | 1,847 | ||||||||||||||||
Other | - | 947 | 362 | 947 | 1,656 | ||||||||||||||||||||
Property insurance recovery | - | - | (5,064 | ) | - | (5,064 | ) | ||||||||||||||||||
$ | 1,710 | $ | 2,389 | $ | (4,407 | ) | $ | 3,785 | $ | 392 | |||||||||||||||
(4) | Interest and other includes: | Quarter Ended | Nine Months Ended | ||||||||||||||||||||||
September 30, 2018 |
July 1, 2018 |
October 1, 2017 |
September 30, 2018 |
October 1, 2017 |
|||||||||||||||||||||
Non-cash convertible debt interest | $ | 3,286 | $ | 3,245 | $ | 3,127 | $ | 9,737 | $ | 9,265 | |||||||||||||||
Pension actuarial loss (gain) | 267 | (71 | ) | - | 196 | (2,504 | ) | ||||||||||||||||||
$ | 3,553 | $ | 3,174 | $ | 3,127 | $ | 9,933 | $ | 6,761 | ||||||||||||||||
(5) |
Under GAAP, when calculating diluted earnings per share, convertible debt must be assumed to have converted if the effect on EPS would be dilutive. Diluted shares assume the conversion of the convertible debt as the effect would be dilutive. Accordingly, for the quarters ended September 30, 2018, July 1, 2018 and October 1, 2017, 3.0 million, 2.6 million and 1.1 million shares, respectively, have been included in diluted shares. For the nine months ended September 30, 2018 and October 1, 2017, 3.4 million and 0.6 million shares, respectively, have been included in diluted shares. For the quarter ended September 30, 2018 and the nine months ended September 30, 2018, diluted shares also included 0.1 million and 0.6 million shares, respectively, from the convertible note hedge transaction. | ||||||||||||||||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) | ||||||||||
September 30, 2018 |
December 31, 2017 |
|||||||||
Assets | ||||||||||
Cash and cash equivalents | $ | 814,019 | $ | 429,843 | ||||||
Marketable securities | 418,410 | 1,347,979 | ||||||||
Accounts receivable, net | 352,476 | 272,783 | ||||||||
Inventories, net | 154,705 | 107,525 | ||||||||
Prepayments and other current assets | 139,785 | 112,151 | ||||||||
Total current assets | 1,879,395 | 2,270,281 | ||||||||
Property, plant and equipment, net | 278,071 | 268,447 | ||||||||
Marketable securities | 91,982 | 125,926 | ||||||||
Deferred tax assets | 70,772 | 84,026 | ||||||||
Other assets | 11,421 | 12,275 | ||||||||
Retirement plans assets | 17,885 | 17,491 | ||||||||
Acquired intangible assets, net | 139,963 | 79,088 | ||||||||
Goodwill | 392,998 | 252,011 | ||||||||
Total assets | $ | 2,882,487 | $ | 3,109,545 | ||||||
Liabilities | ||||||||||
Accounts payable | $ | 107,890 | $ | 86,393 | ||||||
Accrued employees' compensation and withholdings | 116,546 | 141,694 | ||||||||
Deferred revenue and customer advances | 77,953 | 83,614 | ||||||||
Other accrued liabilities | 95,888 | 59,083 | ||||||||
Contingent consideration | 35,532 | 24,497 | ||||||||
Income taxes payable | 24,603 | 59,055 | ||||||||
Total current liabilities | 458,412 | 454,336 | ||||||||
Retirement plans liabilities | 127,037 | 119,776 | ||||||||
Long-term deferred revenue and customer advances | 29,387 | 30,127 | ||||||||
Deferred tax liabilities | 21,748 | 6,720 | ||||||||
Long-term other accrued liabilities | 28,956 | 10,273 | ||||||||
Long-term contingent consideration | 25,410 | 20,605 | ||||||||
Long-term income taxes payable | 147,360 | 148,075 | ||||||||
Long-term debt | 376,417 | 365,987 | ||||||||
Total liabilities | 1,214,727 | 1,155,899 | ||||||||
Shareholders' equity | 1,667,760 | 1,953,646 | ||||||||
Total liabilities and shareholders' equity | $ | 2,882,487 | $ | 3,109,545 | ||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) | |||||||||||||||||||
Quarter Ended | Nine Months Ended | ||||||||||||||||||
September 30, 2018 |
October 1, 2017 |
September 30, 2018 |
October 1, 2017 |
||||||||||||||||
Cash flows from operating activities: | |||||||||||||||||||
Net income | $ | 119,981 | $ | 103,420 | $ | 307,991 | $ | 363,616 | |||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||||
Depreciation | 16,774 | 16,769 | 49,930 | 49,243 | |||||||||||||||
Amortization | 12,732 | 9,901 | 32,909 | 32,313 | |||||||||||||||
Stock-based compensation | 7,702 | 8,308 | 25,327 | 25,620 | |||||||||||||||
Deferred taxes | 7,130 | 2,884 | 24,442 | (679 | ) | ||||||||||||||
Provision for excess and obsolete inventory | 3,347 | 1,859 | 9,522 | 7,154 | |||||||||||||||
Contingent consideration adjustment | (768 | ) | (286 | ) | (9,236 | ) | 1,847 | ||||||||||||
Retirement plan actuarial losses | 267 | - | 196 | (2,504 | ) | ||||||||||||||
Property insurance recovery | - | (4,309 | ) | - | (4,309 | ) | |||||||||||||
Other | (652 | ) | 36 | 516 | 429 | ||||||||||||||
Changes in operating assets and liabilities, net of businesses acquired: | |||||||||||||||||||
Accounts receivable | 101,596 | 137,807 | (77,807 | ) | (75,623 | ) | |||||||||||||
Inventories | (12,834 | ) | 31,919 | (34,117 | ) | 23,770 | |||||||||||||
Prepayments and other assets | (30,360 | ) | 2,937 | (28,719 | ) | 7,362 | |||||||||||||
Accounts payable and other accrued expenses | 24,279 | (27,778 | ) | 16,124 | 5,298 | ||||||||||||||
Deferred revenue and customer advances | (695 | ) | 29,223 | 9,823 | 34,535 | ||||||||||||||
Retirement plans contributions | (1,071 | ) | (2,875 | ) | (3,244 | ) | (4,858 | ) | |||||||||||
Income taxes | (6,844 | ) | 15 | (33,152 | ) | 15,808 | |||||||||||||
Net cash provided by operating activities | 240,584 | 309,830 | 290,505 | 479,022 | |||||||||||||||
Cash flows from investing activities: | |||||||||||||||||||
Purchases of property, plant and equipment | (25,606 | ) | (27,280 | ) | (88,269 | ) | (73,247 | ) | |||||||||||
Proceeds from government subsidy for property, plant and equipment | 7,920 | - | 7,920 | - | |||||||||||||||
Purchases of marketable securities | (162,450 | ) | (701,704 | ) | (809,521 | ) | (1,036,523 | ) | |||||||||||
Proceeds from sales of marketable securities | 14,111 | 129,915 | 843,164 | 443,169 | |||||||||||||||
Proceeds from maturities of marketable securities | 464,238 | 165,648 | 934,100 | 473,255 | |||||||||||||||
Proceed from property insurance | - | 5,064 | - | 5,064 | |||||||||||||||
Proceed from life insurance | 1,126 | - | 1,126 | - | |||||||||||||||
Acquisition of businesses, net of cash acquired | 1,158 | - | (169,474 | ) | - | ||||||||||||||
Net cash provided by (used for) investing activities | 300,497 | (428,357 | ) | 719,046 | (188,282 | ) | |||||||||||||
Cash flows from financing activities: | |||||||||||||||||||
Issuance of common stock under stock purchase and stock option plans | 10,278 | 9,247 | 20,959 | 24,462 | |||||||||||||||
Repurchase of common stock | (201,468 | ) | (57,493 | ) | (562,263 | ) | (151,821 | ) | |||||||||||
Dividend payments | (16,638 | ) | (13,805 | ) | (51,320 | ) | (41,730 | ) | |||||||||||
Payment related to net settlement of employee stock compensation awards | (90 | ) | (146 | ) | (19,841 | ) | (12,584 | ) | |||||||||||
Payment of contingent consideration | - | - | (13,571 | ) | (1,050 | ) | |||||||||||||
Net cash used for financing activities | (207,918 | ) | (62,197 | ) | (626,036 | ) | (182,723 | ) | |||||||||||
Effects of exchange rate changes on cash and cash equivalents | 472 | 1,052 | 661 | 2,776 | |||||||||||||||
Increase (decrease) in cash and cash equivalents | 333,635 | (179,672 | ) | 384,176 | 110,793 | ||||||||||||||
Cash and cash equivalents at beginning of period | 480,384 | 598,349 | 429,843 | 307,884 | |||||||||||||||
Cash and cash equivalents at end of period | $ | 814,019 | $ | 418,677 | $ | 814,019 | $ | 418,677 | |||||||||||
GAAP to Non-GAAP Earnings Reconciliation | |||||||||||||||||||||||||||||||||||||||||||||||||
(In millions, except per share amounts) | |||||||||||||||||||||||||||||||||||||||||||||||||
Quarter Ended | |||||||||||||||||||||||||||||||||||||||||||||||||
September 30, 2018 |
% of Net Revenues | July 1, 2018 |
% of Net Revenues | October 1, 2017 (1) |
% of Net Revenues | ||||||||||||||||||||||||||||||||||||||||||||
Net revenues | $ | 566.8 | $ | 526.9 | $ | 503.4 | |||||||||||||||||||||||||||||||||||||||||||
Gross profit GAAP | $ | 333.7 | 58.9 | % | $ | 307.3 | 58.3 | % | $ | 294.8 | 58.6 | % | |||||||||||||||||||||||||||||||||||||
Inventory step-up | - | - | 0.4 | 0.1 | % | - | - | ||||||||||||||||||||||||||||||||||||||||||
Gross profit non-GAAP | $ | 333.7 | 58.9 | % | $ | 307.7 | 58.4 | % | $ | 294.8 | 58.6 | % | |||||||||||||||||||||||||||||||||||||
Income from operations - GAAP | $ | 143.6 | 25.3 | % | $ | 120.4 | 22.9 | % | $ | 129.1 | 25.6 | % | |||||||||||||||||||||||||||||||||||||
Acquired intangible assets amortization | 11.1 | 2.0 | % | 9.8 | 1.9 | % | 7.0 | 1.4 | % | ||||||||||||||||||||||||||||||||||||||||
Restructuring and other (2) | 1.7 | 0.3 | % | 2.4 | 0.5 | % | (4.4 | ) | -0.9 | % | |||||||||||||||||||||||||||||||||||||||
Inventory step-up | - | - | 0.4 | 0.1 | % | - | - | ||||||||||||||||||||||||||||||||||||||||||
Income from operations - non-GAAP | $ | 156.4 | 27.6 | % | $ | 133.0 | 25.2 | % | $ | 131.7 | 26.2 | % | |||||||||||||||||||||||||||||||||||||
Net Income per Common Share |
Net Income per Common Share |
Net Income per Common Share |
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September 30, 2018 |
% of Net Revenues | Basic | Diluted | July 1, 2018 |
% of Net Revenues | Basic | Diluted | October 1, 2017 |
% of Net Revenues | Basic | Diluted | ||||||||||||||||||||||||||||||||||||||
Net income - GAAP | $ | 120.0 | 21.2 | % | $ | 0.65 | $ | 0.63 | $ | 101.0 | 19.2 | % | $ | 0.53 | $ | 0.52 | $ | 103.4 | 20.5 | % | $ | 0.52 | $ | 0.51 | |||||||||||||||||||||||||
Acquired intangible assets amortization | 11.1 | 2.0 | % | 0.06 | 0.06 | 9.8 | 1.9 | % | 0.05 | 0.05 | 7.0 | 1.4 | % | 0.04 | 0.03 | ||||||||||||||||||||||||||||||||||
Interest and other (3) | 3.3 | 0.6 | % | 0.02 | 0.02 | 3.2 | 0.6 | % | 0.02 | 0.02 | 3.1 | 0.6 | % | 0.02 | 0.02 | ||||||||||||||||||||||||||||||||||
Restructuring and other (2) | 1.7 | 0.3 | % | 0.01 | 0.01 | 2.4 | 0.5 | % | 0.01 | 0.01 | (4.4 | ) | -0.9 | % | (0.02 | ) | (0.02 | ) | |||||||||||||||||||||||||||||||
Pension mark-to-market adjustment (3) | 0.3 | 0.1 | % | 0.00 | 0.00 | (0.1 | ) | 0.0 | % | (0.00 | ) | (0.00 | ) | - | - | - | - | ||||||||||||||||||||||||||||||||
Inventory step-up | - | - | - | - | 0.4 | 0.1 | % | 0.00 | 0.00 | - | - | - | - | ||||||||||||||||||||||||||||||||||||
Exclude discrete tax adjustments (4) | 0.3 | 0.1 | % | 0.00 | 0.00 | (0.5 | ) | -0.1 | % | (0.00 | ) | (0.00 | ) | 0.3 | 0.1 | % | 0.00 | 0.00 | |||||||||||||||||||||||||||||||
Non-GAAP tax adjustments | (3.4 | ) | -0.6 | % | (0.02 | ) | (0.02 | ) | (3.4 | ) | -0.6 | % | (0.02 | ) | (0.02 | ) | (1.7 | ) | -0.3 | % | (0.01 | ) | (0.01 | ) | |||||||||||||||||||||||||
Convertible share adjustment | - | - | - | 0.01 | - | - | - | 0.01 | - | - | - | - | |||||||||||||||||||||||||||||||||||||
Net income - non-GAAP | $ | 133.3 | 23.5 | % | $ | 0.72 | $ | 0.71 | $ | 112.8 | 21.4 | % | $ | 0.59 | $ | 0.59 | $ | 107.7 | 21.4 | % | $ | 0.55 | $ | 0.54 | |||||||||||||||||||||||||
GAAP and non-GAAP weighted average common shares - basic | 185.7 | 190.7 | 197.5 | ||||||||||||||||||||||||||||||||||||||||||||||
GAAP weighted average common shares - diluted | 190.5 | 194.9 | 200.8 | ||||||||||||||||||||||||||||||||||||||||||||||
Exclude dilutive shares related to convertible note transaction | (3.1 | ) | (2.6 | ) | (1.1 | ) | |||||||||||||||||||||||||||||||||||||||||||
Non-GAAP weighted average common shares - diluted | 187.4 | 192.3 | 199.7 | ||||||||||||||||||||||||||||||||||||||||||||||
(1) | Certain prior period amounts were reclassified to conform with the first quarter 2018 adoption of new accounting guidance for the presentation of pension and post retirement costs. |
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(2) | Restructuring and other consists of: | ||||||||||||||||||||||||||||||||||||||||||||||||
Quarter Ended | |||||||||||||||||||||||||||||||||||||||||||||||||
September 30, 2018 |
July 1, 2018 |
October 1, 2017 |
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Employee severance | $ | 1.7 | $ | 2.4 | $ | 0.6 | |||||||||||||||||||||||||||||||||||||||||||
Acquisition related expenses and compensation | 0.8 | 2.5 | - | ||||||||||||||||||||||||||||||||||||||||||||||
Contingent consideration fair value adjustment | (0.8 | ) | (3.5 | ) | (0.3 | ) | |||||||||||||||||||||||||||||||||||||||||||
Other | - | 0.9 | 0.4 | ||||||||||||||||||||||||||||||||||||||||||||||
Property insurance recovery | - | - | (5.1 | ) | |||||||||||||||||||||||||||||||||||||||||||||
$ | 1.7 | $ | 2.4 | $ | (4.4 | ) | |||||||||||||||||||||||||||||||||||||||||||
(3) |
For the quarters ended September 30, 2018, July 1, 2018 and October 1, 2017, adjustment to exclude non-cash convertible debt interest expense. For the quarters ended September 30, 2018 and July 1, 2018, adjustments to exclude actuarial losses recognized under GAAP in accordance with Teradyne's mark-to-market pension accounting policy. |
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(4) | For the quarters ended September 30, 2018, July 1, 2018 and October 1, 2017, adjustment to exclude discrete income tax items. | ||||||||||||||||||||||||||||||||||||||||||||||||
Nine Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||
September 30, 2018 |
% of Net Revenues | October 1, 2017 (1) |
% of Net Revenues | ||||||||||||||||||||||||||||||||||||||||||||||
Net Revenues |
$ | 1,581.2 | $ | 1,657.2 | |||||||||||||||||||||||||||||||||||||||||||||
Gross profit GAAP | $ | 910.9 | 57.6 | % | $ | 950.5 | 57.4 | % | |||||||||||||||||||||||||||||||||||||||||
Inventory step-up | 0.4 | 0.0 | % | - | - | ||||||||||||||||||||||||||||||||||||||||||||
Gross profit non-GAAP | $ | 911.3 | 57.6 | % | $ | 950.5 | 57.4 | % | |||||||||||||||||||||||||||||||||||||||||
Income from operations - GAAP | $ | 361.5 | 22.9 | % | $ | 430.7 | 26.0 | % | |||||||||||||||||||||||||||||||||||||||||
Acquired intangible assets amortization | 28.6 | 1.8 | % | 23.1 | 1.4 | % | |||||||||||||||||||||||||||||||||||||||||||
Restructuring and other (2) | 3.8 | 0.2 | % | 0.4 | 0.0 | % | |||||||||||||||||||||||||||||||||||||||||||
Inventory step-up | 0.4 | 0.0 | % | - | - | ||||||||||||||||||||||||||||||||||||||||||||
Income from operations - non-GAAP | $ | 394.3 | 24.9 | % | $ | 454.2 | 27.4 | % | |||||||||||||||||||||||||||||||||||||||||
Net Income per Common Share |
Net Income per Common Share |
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September 30, 2018 |
% of Net Revenues | Basic | Diluted | October 1, 2017 |
% of Net Revenues | Basic | Diluted | ||||||||||||||||||||||||||||||||||||||||||
Net income - GAAP | $ | 308.0 | 19.5 | % | $ | 1.62 | $ | 1.57 | $ | 363.6 | 21.9 | % | $ | 1.83 | $ |