Teradyne Reports 6% Revenue Growth Year on Year in First Quarter 2017; Expects Sequential Revenue and Earnings per Share Growth in Second Quarter

• Q1’17 revenue of $457 million, up 6% from Q1’16 and 20% from Q4’16
• Semiconductor Test revenue up 4% from Q1’16
• Universal Robots revenue up 117% from Q1’16

NORTH READING, Mass.--(BUSINESS WIRE)-- Teradyne, Inc. (NYSE: TER):

		Q1’17		Q1’16		Q4’16		Q4’15
Orders (mil)		$595		$389		$628		$522
Revenue (mil)		$457		$431		$380		$318
GAAP EPS		$0.42		$0.24		$0.33		($0.00)
Non-GAAP EPS		$0.44		$0.31		$0.32		$0.13

Teradyne, Inc. (NYSE: TER) reported revenue of $457 million for the first quarter of 2017 of which $356 million was in Semiconductor Test, $40 million in System Test, $36 million in Industrial Automation, and $25 million in Wireless Test. GAAP net income for the first quarter was $85.2 million or $0.42 per share. On a non-GAAP basis, Teradyne’s net income in the first quarter was $88.7 million, or $0.44 per diluted share, which excluded acquired intangible asset amortization, restructuring and other charges, non-cash convertible debt interest, discrete income tax adjustments, and included the related tax impact on non-GAAP adjustments.

Orders in the first quarter of 2017 were $595 million of which $476 million were in Semiconductor Test, $46 million in System Test, $45 million in Industrial Automation, and $27 million in Wireless Test.

“We’re off to a great start in 2017 with year over year quarterly orders up 53%, revenue up 6%, and non-GAAP EPS up 42% to $0.44,” said CEO and President Mark Jagiela. “Semiconductor Test year over year quarterly orders were up 56% on broad strength in mobile, automotive, industrial analog, and Flash memory end market demand. Universal Robots’ (UR) year over year quarterly sales were up 117% powered by an expanding range of customers embracing the power of UR’s collaborative robots to reduce production costs and improve product quality.

“With our large backlog and strong first quarter orders, our Q2 revenue is expected to increase 28% year on year at the mid-point of our Q2 guidance. While we expect the familiar seasonality in the second half, we’re on track for another year of revenue and operating profit growth.”

Guidance for the second quarter of 2017 is revenue of $660 million to $700 million, with GAAP net income of $0.77 to $0.86 per diluted share and non-GAAP net income of $0.81 to $0.90 per diluted share. Non-GAAP guidance excludes acquired intangible asset amortization, non-cash convertible debt interest and includes the related tax impact on non-GAAP adjustments.

Webcast
A conference call to discuss the first quarter results, along with management's business outlook, will follow at 10 a.m. ET, Thursday, April 27. Interested investors should access the webcast at www.teradyne.com and click on "Investors" at least five minutes before the call begins. Presentation materials will be available starting at 10 a.m. ET. A replay will be available on the Teradyne website at www.teradyne.com/investors.

Non-GAAP Results
In addition to disclosing results that are determined in accordance with GAAP, Teradyne also discloses non-GAAP results of operations that exclude certain income items and charges. These results are provided as a complement to results provided in accordance with GAAP. Non-GAAP income from operations and non-GAAP net income exclude acquired intangible asset amortization, non-cash convertible debt interest, pension actuarial gains and losses, discrete income tax adjustments and restructuring and other. GAAP requires that these items be included in determining income from operations and net income. Non-GAAP income from operations, non-GAAP net income, non-GAAP income from operations and non-GAAP net income as a percentage of revenue, and non-GAAP net income per share are non-GAAP performance measures presented to provide meaningful supplemental information regarding Teradyne's baseline performance before gains, losses or other charges that may not be indicative of Teradyne’s current core business or future outlook. These non-GAAP performance measures are used to make operational decisions, to determine employee compensation, to forecast future operational results, and for comparison with Teradyne’s business plan, historical operating results and the operating results of Teradyne’s competitors. Non-GAAP gross margin excludes pension actuarial gains and losses. GAAP requires that these items be included in determining gross margin. Non-GAAP gross margin dollar amount and percentage are non-GAAP performance measures that management believes provide useful supplemental information for management and the investor. Management uses non-GAAP gross margin as a performance measure for Teradyne’s current core business and future outlook and for comparison with Teradyne’s business plan, historical gross margin results and the gross margin results of Teradyne’s competitors. Management believes each of these non-GAAP performance measures provides useful supplemental information for investors, allowing greater transparency to the information used by management in its operational decision making and in the review of Teradyne’s financial and operational performance, as well as facilitating meaningful comparisons of Teradyne’s results in the current period compared with those in prior and future periods. A reconciliation of each available GAAP to non-GAAP financial measure discussed in this press release is contained in the attached exhibits and on the Teradyne website at www.teradyne.com by clicking on "Investors" and then selecting the "GAAP to Non-GAAP Reconciliation" link. The non-GAAP performance measures discussed in this press release may not be comparable to similarly titled measures used by other companies. The presentation of non-GAAP measures is not meant to be considered in isolation, as a substitute for, or superior to, financial measures or information provided in accordance with GAAP.

About Teradyne
Teradyne (NYSE:TER) is a leading supplier of automation equipment for test and industrial applications. Teradyne Automatic Test Equipment (ATE) is used to test semiconductors, wireless products, data storage and complex electronic systems, which serve consumer, communications, industrial and government customers. Our Industrial Automation products include Collaborative Robots used by global manufacturing and light industrial customers to improve quality and increase manufacturing efficiency. In 2016, Teradyne had revenue of $1.75 billion and currently employs approximately 4,300 people worldwide. For more information, visit www.teradyne.com. Teradyne^(R) is a registered trademark of Teradyne, Inc. in the U.S. and other countries.

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 common stock pursuant to a share repurchase program, use of proceeds and potential dilution from the senior convertible notes offering and potential borrowings under a senior secured credit facility. Such statements are based on the current assumptions and expectations of Teradyne’s management and are neither promises nor guarantees of future performance, events, earnings per share, use of cash, payment of dividends, repurchases of common stock, payment of the senior convertible notes or availability of, or borrowing under, the credit facility. There can be no assurance that management’s estimates of Teradyne’s future results or other forward-looking statements will be achieved. Additionally, the current dividend and share repurchase programs may be modified, suspended or discontinued at any time. Important factors that could cause actual results, earnings per share, use of cash, dividend payments, repurchases of common stock, payment of the senior convertible notes or borrowings under the credit facility to differ materially from those presently expected include: conditions affecting the markets in which Teradyne operates; decreased or delayed product demand from one or more significant customers; development, delivery and acceptance of new products; the ability to grow Universal Robots’ business; increased research and development spending; deterioration of Teradyne’s financial condition; the consummation and success of any mergers or acquisitions; unexpected cash needs; insufficient cash flow to make required payments and pay the principal amount on the senior convertible notes; the business judgment of the board of directors that a declaration of a dividend, the repurchase of common stock or borrowing under the credit facility is not in the company’s best interests; and other events, factors and risks disclosed in filings with the SEC, including, but not limited to, the “Risk Factors” section of Teradyne’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016. The forward-looking statements provided by Teradyne in this press release represent management’s views as of the date of this release. Teradyne anticipates that subsequent events and developments may cause management's views to change. However, while Teradyne may elect to update these forward-looking statements at some point in the future, Teradyne specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing Teradyne's views as of any date subsequent to the date of this release.

TERADYNE, INC. REPORT FOR FIRST FISCAL QUARTER OF 2017
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
				Quarter Ended
				April 2, 2017				December 31, 2016				April 3, 2016
Net revenues				$	456,913			$	379,989			$	430,994
Cost of revenues (exclusive of acquired intangible assets amortization shown separately below) (1) (2)					191,980				160,983				200,662
Gross profit					264,933				219,006				230,332
Operating expenses:
Engineering and development (1)					76,182				70,052				73,464
Selling and administrative (1)					84,906				76,289				79,174
Acquired intangible assets amortization					7,952				7,923				19,994
Restructuring and other (3)					2,511				5,570				1,587
Operating expenses					171,551				159,834				174,219
Income from operations					93,382				59,172				56,113
Interest and other (4)					(1,366	)			(288	)			1,079
Income before income taxes					92,016				58,884				57,192
Income tax provision (benefit)					6,795				(7,461	)			7,206
Net income				$	85,221			$	66,345			$	49,986
Net income per common share:
Basic				$	0.43			$	0.33			$	0.24
Diluted				$	0.42			$	0.33			$	0.24
Weighted average common shares - basic					200,005				200,810				204,271
Weighted average common shares - diluted					201,936				202,947				205,732
Cash dividend declared per common share				$	0.07			$	0.06			$	0.06
					.
Net orders				$	594,733			$	628,284			$	389,417
(1) Pension actuarial gains included in our operating results were as follows:
				Quarter Ended
				April 2, 2017				December 31, 2016				April 3, 2016
Cost of revenues				$	-			$	(774	)		$	(393	)
Engineering and development					-				(725	)			(394	)
Selling and administrative					-				(502	)			(406	)
				$	-			$	(2,001	)		$	(1,193	)
(2) Cost of revenues includes:				Quarter Ended
				April 2, 2017				December 31, 2016				April 3, 2016
Provision for excess and obsolete inventory				$	2,726			$	2,345			$	4,373
Sale of previously written down inventory					(1,134	)			(1,924	)			(1,168	)
				$	1,592			$	421			$	3,205
(3) Restructuring and other consists of:				Quarter Ended
				April 2, 2017				December 31, 2016				April 3, 2016
Facility related				$	1,294			$	-			$	-
Contingent consideration fair value adjustment					634				5,445				1,173
Employee severance					583				125				414
				$	2,511			$	5,570			$	1,587
(4) Interest and other includes:				Quarter Ended
				April 2, 2017				December 31, 2016				April 3, 2016
Non-cash convertible debt interest expense				$	3,050			$	642			$	-

CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)
				April 2, 2017			December 31, 2016
Assets
Cash and cash equivalents				$	324,746		$	307,884
Marketable securities					895,578			871,024
Accounts receivable					314,962			192,444
Inventories, net					203,278			135,958
Prepayments					106,987			108,454
Other current assets					8,602			8,039
Total current assets					1,854,153			1,623,803
Property, plant and equipment, net					253,548			253,821
Marketable securities					262,061			433,843
Deferred tax assets					127,918			107,405
Other assets					12,175			12,165
Retirement plans assets					7,517			7,712
Intangible assets, net					94,843			100,401
Goodwill					230,065			223,343
Total assets				$	2,842,280		$	2,762,493
Liabilities
Accounts payable				$	121,417		$	95,362
Accrued employees' compensation and withholdings					79,018			109,944
Deferred revenue and customer advances					78,794			84,478
Other accrued liabilities					67,651			51,382
Contingent consideration					21,711			1,050
Accrued income taxes					24,466			30,480
Total current liabilities					393,057			372,696
Retirement plans liabilities					110,069			106,938
Long-term deferred revenue and customer advances					25,983			23,463
Deferred tax liabilities					11,255			12,144
Long-term other accrued liabilities					9,921			28,642
Long-term contingent consideration					16,205			37,282
Long-term debt					355,937			352,669
Total liabilities					922,427			933,834
Shareholders' equity					1,919,853			1,828,659
Total liabilities and shareholders' equity				$	2,842,280		$	2,762,493

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
				Quarter Ended
				April 2, 2017				April 3, 2016
Cash flows from operating activities:
Net income				$	85,221			$	49,986
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation					16,143				16,192
Amortization					11,070				20,470
Stock-based compensation					8,945				7,925
Provision for excess and obsolete inventory					2,726				4,373
Contingent consideration adjustment					634				1,173
Deferred taxes					(3,477	)			(5,496	)
Retirement plans actuarial gains					-				(1,193	)
Other					2				484
Changes in operating assets and liabilities:
Accounts receivable					(123,792	)			(42,552	)
Inventories					(62,152	)			(702	)
Prepayments and other assets					1,104				(1,148	)
Accounts payable and accrued expenses					(7,553	)			1,346
Deferred revenue and customer advances					(3,333	)			(13,836	)
Retirement plans contributions					(947	)			(1,250	)
Accrued income taxes					14,288				(52	)
Net cash (used for) provided by operating activities					(61,121	)			35,720
Cash flows from investing activities:
Purchases of property, plant and equipment					(22,066	)			(20,334	)
Purchases of available-for-sale marketable securities					(153,317	)			(221,778	)
Proceeds from sales of available-for-sale marketable securities					213,593				239,370
Proceeds from maturities of available-for-sale marketable securities					88,184				73,458
Net cash provided by investing activities					126,394				70,716
Cash flows from financing activities:
Issuance of common stock under stock purchase and stock option plans					15,084				9,140
Repurchase of common stock					(37,730	)			(28,001	)
Dividend payments					(14,021	)			(12,253	)
Payment related to net settlement of employee stock compensation awards					(12,289	)			(8,972	)
Payment of contingent consideration					(1,050	)			(11,697	)
Net cash used for financing activities					(50,006	)			(51,783	)
Effects of exchange rate changes on cash and cash equivalents					1,595				-
Increase in cash and cash equivalents					16,862				54,653
Cash and cash equivalents at beginning of period					307,884				264,705
Cash and cash equivalents at end of period				$	324,746			$	319,358

GAAP to Non-GAAP Earnings Reconciliation
(In millions, except per share amounts)
				Quarter Ended
				April 2, 2017				% of Net Revenues															December 31, 2016				% of Net Revenues														April 3, 2016				% of Net Revenues
Net revenues				$	456.9																		$	380.0																	$	431.0
Gross profit - GAAP				$	264.9				58.0	%													$	219.0			57.6	%													$	230.3			53.4	%
Pension mark-to-market adjustments (1)					-				-															(0.8	)		-0.2	%														(0.4	)		-0.1	%
Gross profit - non-GAAP				$	264.9				58.0	%													$	218.2			57.4	%													$	229.9			53.3	%
Income from operations - GAAP				$	93.4				20.4	%													$	59.2			15.6	%													$	56.1			13.0	%
Acquired intangible assets amortization					8.0				1.8	%														7.9			2.1	%														20.0			4.6	%
Restructuring and other (2)					2.5				0.5	%														5.6			1.5	%														1.6			0.4	%
Pension mark-to-market adjustments (1)					-				-															(2.0	)		-0.5	%														(1.2	)		-0.3	%
Income from operations - non-GAAP				$	103.9				22.7	%													$	70.7			18.6	%													$	76.5			17.7	%
												Net Income per Common Share																		Net Income per Common Share																		Net Income per Common Share
				April 2, 2017				% of Net Revenues				Basic				Diluted							December 31, 2016				% of Net Revenues			Basic				Diluted							April 3, 2016				% of Net Revenues			Basic				Diluted
Net income - GAAP				$	85.2				18.6	%		$	0.43			$	0.42						$	66.3			17.4	%		$	0.33			$	0.33						$	50.0			11.6	%		$	0.24			$	0.24
Acquired intangible assets amortization					8.0				1.8	%			0.04				0.04							7.9			2.1	%			0.04				0.04							20.0			4.6	%			0.10			$	0.10
Restructuring and other (2)					2.5				0.5	%			0.01				0.01							5.6			1.5	%			0.03				0.03							1.6			0.4	%			0.01			$	0.01
Pension mark-to-market adjustments (1)					-				-				-				-							(2.0	)		-0.5	%			(0.01	)			(0.01	)						(1.2	)		-0.3	%			(0.01	)		$	(0.01	)
Interest and other (3)					3.1				0.7	%			0.02				0.02							0.6			0.2	%			0.00				0.00							-			-				-			$	-
Exclude discrete tax adjustments (4)					(7.0	)			-1.5	%			(0.04	)			(0.03	)						(16.2	)		-4.3	%			(0.08	)			(0.08	)						(2.5	)		-0.6	%			(0.01	)		$	(0.01	)
Non-GAAP tax adjustments (5)					(3.1	)			-0.7	%			(0.02	)			(0.02	)						2.4			0.6	%			0.01				0.01							(3.5	)		-0.8	%			(0.02	)		$	(0.02	)
Net income - non-GAAP				$	88.7				19.4	%		$	0.44			$	0.44						$	64.6			17.0	%		$	0.32			$	0.32						$	64.4			14.9	%		$	0.32			$	0.31
GAAP and non-GAAP weighted average common shares - basic					200.0																			200.8																		204.3
GAAP and non-GAAP weighted average common shares - diluted					201.9																			202.9																		205.7
(1) Actuarial (gains) losses recognized under GAAP in accordance with Teradyne's mark-to-market pension accounting.
(2) Restructuring and other consists of:
				Quarter Ended
				April 2, 2017																			December 31, 2016																		April 3, 2016
Facility related				$	1.3																		$	-																	$	-
Contingent consideration fair value adjustment					0.6																			5.4																		1.2
Employee severance					0.6																			0.1																		0.4
				$	2.5																		$	5.6																	$	1.6
(3) For the quarters ended April 2, 2017 and December 31, 2016, interest and other included non-cash convertible debt interest expense.
(4) For the quarters ended April 2, 2017, December 31, 2016 and April 3, 2016, adjustment to exclude discrete income tax items. For the quarter ended December 31, 2016, adjustment to treat Wireless Test business segment goodwill and intangible assets impairments as discrete tax items.
(5) For periods after December 31, 2016, the non-GAAP annual effective tax rate is based on a with and without calculation with respect to non-GAAP reconciling items.
				Quarter Ended
				December 31, 2015
Net revenues				$	318.4
												Net (Loss) Income per Common Share
				December 31, 2015				% of Net Revenues				Diluted
Net loss - GAAP				$	(0.6	)			-0.2	%		$	(0.00	)
Acquired intangible assets amortization					19.9				6.3	%			0.10
Restructuring and other (6)					5.2				1.6	%			0.03
Pension mark-to-market adjustments (7)					17.8				5.6	%			0.09
Exclude discrete tax adjustments (8)					(6.3	)			-2.0	%			(0.03	)
Non-GAAP tax adjustments					(9.9	)			-3.1	%			(0.05	)
Net income - non-GAAP				$	26.1				8.2	%		$	0.13
GAAP weighted average common shares - diluted					205.1
Include dilutive shares					2.1
Non-GAAP weighted average common shares - diluted					207.2
(6) Actuarial (gains) losses recognized under GAAP in accordance with Teradyne's mark-to-market pension accounting.
(7) Restructuring and other consists of:
				December 31, 2015
Contingent consideration fair value adjustment				$	5.1
Employee severance					0.1
				$	5.2
(8) Adjustment to exclude discrete income tax items.
GAAP to Non-GAAP Reconciliation of Second Quarter 2017 guidance:
GAAP and non-GAAP second quarter revenue guidance:								$660 million			to	$700 million
GAAP net income per diluted share								$	0.77			$	0.86
Exclude acquired intangible assets amortization									0.04				0.04
Exclude non-cash convertible debt interest									0.02				0.02
Tax effect of non-GAAP adjustments									(0.02	)			(0.02	)
Non-GAAP net income per diluted share								$	0.81			$	0.90

For press releases and other information of interest to investors, please visit Teradyne's homepage at http://www.teradyne.com.

View source version on businesswire.com: http://www.businesswire.com/news/home/20170426006609/en/

Teradyne, Inc.
Andy Blanchard, 978-370-2425
Vice President of Corporate Relations

Source: Teradyne, Inc.