- Revenue of $520 million in Q4’18, organic growth of 5% from Q4’17
- Record full year memory and analog test shipments
- Record 60% quarterly and 58% full year gross margin
- Expect to repurchase $500 million in shares in 2019
- Quarterly dividend of $0.09 declared
Q4’18 | Q4’17 | Q3’18 | FY 2018 | FY 2017 | ||||||
Revenue (mil) | $520 | $479 | $567 | $2,101 | $2,137 | |||||
GAAP EPS | $0.79 | ($0.54) | $0.63 | $2.35 | $1.28 | |||||
Non-GAAP EPS | $0.63 | $0.46 | $0.71 | $2.37 | $2.34 |
NORTH READING, Mass., Jan. 23, 2019 (GLOBE NEWSWIRE) — Teradyne, Inc. (NASDAQ: TER) reported revenue of $520 million for the fourth quarter of 2018 of which $342 million was in Semiconductor Test, $84 million in Industrial Automation (IA), $54 million in System Test and $40 million in Wireless Test. GAAP net income for the fourth quarter was $143.8 million or $0.79 per share. On a non-GAAP basis, Teradyne’s net income in the fourth quarter was $113.0 million, or $0.63 per diluted share, which excluded restructuring and other charges, acquired intangible asset amortization, pension actuarial gains, non-cash convertible debt interest, discrete income tax adjustments, and included the related tax impact on non-GAAP adjustments.
“We finished 2018 with strong fourth quarter sales above the high end of our guidance driven by upside demand in our Semiconductor and Wireless test businesses,” said CEO and President Mark Jagiela. “For the full year, our Semiconductor Test group delivered record memory and analog revenues, which lessened the impact of lower mobility test shipments. Gross margin for the year was at a record level due mainly to continued Universal Robots manufacturing cost reductions and a favorable product mix overall. In IA, Universal Robots’ full year growth of 38%, while strong, was below our target due mainly to slowing demand in China and the automotive sector. MiR sales for the year more than doubled on a pro-forma basis.”
As part of the $1.5 billion authorization established in January 2018, Teradyne purchased $823 million of its common shares in 2018 and expects to repurchase $500 million of its common shares in 2019.
Teradyne’s Board of Directors declared a quarterly cash dividend of $0.09 per share, payable on March 22, 2019 to shareholders of record as of the close of business on February 22, 2019.
Guidance for the first quarter of 2019 is revenue of $460 million to $490 million, with GAAP net income of $0.31 to $0.39 per diluted share and non-GAAP net income of $0.39 to $0.47 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 fourth quarter results, along with management’s business outlook, will follow at 10:00 a.m. ET, Thursday, January 24. Interested investors should access the webcast at investors.teradyne.com/events-presentations at least five minutes before the call begins. Presentation materials will be available starting at 10:00 a.m. ET. A replay will be available on the Teradyne website at 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 assets amortization, non-cash convertible debt interest, pension actuarial gains and losses, discrete income tax adjustments, fair value inventory step-up related to Mobile Industrial Robots, and restructuring and other, and includes the related tax impact on non-GAAP adjustments. 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 as a percentage of revenue, 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 fair value inventory step-up related to Mobile Industrial Robots. GAAP requires that this item 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. Non-GAAP diluted shares include the impact of Teradyne’s call option on its shares. 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 (NASDAQ: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, autonomous mobile robots and sensing and simulation software, used by global manufacturing and industrial customers to improve quality and increase manufacturing efficiency. In 2018, Teradyne had revenue of $2.1 billion and currently employs approximately 4,900 people worldwide. For more information, visit teradyne.com. Teradyne® 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, potential borrowings under a senior secured credit facility, and the impact of the U.S. tax reform, export and tariff laws. 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, availability of, or borrowing under, the credit facility, or the impact of the U.S. tax reform, export and tariff laws. 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 the Industrial Automation 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; additional U.S. tax regulations or IRS guidance; the impact of any tariffs or export controls imposed in the U.S. or China; 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, 2017 and the Quarterly Report on Form 10-Q for the period ended September 30, 2018. 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 FOURTH FISCAL QUARTER OF 2018 | |||||||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||||||||
(In thousands, except per share amounts) | |||||||||||||||||||||||||
Quarter Ended | Twelve Months Ended | ||||||||||||||||||||||||
December 31, 2018 |
September 30, 2018 |
December 31, 2017 (1) |
December 31, 2018 |
December 31, 2017 (1) |
|||||||||||||||||||||
Net revenues | $ | 519,558 | $ | 566,848 | $ | 479,415 | $ | 2,100,802 | $ | 2,136,606 | |||||||||||||||
Cost of revenues (exclusive of acquired intangible assets amortization shown separately below) (2) | 210,022 | 233,155 | 208,485 | 880,408 | 915,153 | ||||||||||||||||||||
Gross profit | 309,536 | 333,693 | 270,930 | 1,220,394 | 1,221,453 | ||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||
Selling and administrative | 100,552 | 100,199 | 87,880 | 390,669 | 348,913 | ||||||||||||||||||||
Engineering and development | 74,706 | 77,049 | 72,070 | 301,505 | 307,305 | ||||||||||||||||||||
Acquired intangible assets amortization | 10,559 | 11,142 | 7,384 | 39,191 | 30,530 | ||||||||||||||||||||
Restructuring and other (3) | 11,446 | 1,710 | 8,970 | 15,232 | 9,362 | ||||||||||||||||||||
Operating expenses | 197,263 | 190,100 | 176,304 | 746,597 | 696,110 | ||||||||||||||||||||
Income from operations | 112,273 | 143,593 | 94,626 | 473,797 | 525,343 | ||||||||||||||||||||
Interest and other expense (income) (4) | 1,144 | 2,749 | (3,458 | ) | 5,996 | 931 | |||||||||||||||||||
Income before income taxes | 111,129 | 140,844 | 98,084 | 467,801 | 524,412 | ||||||||||||||||||||
Income tax (benefit) provision (5) | (32,662 | ) | 20,863 | 204,007 | 16,022 | 266,720 | |||||||||||||||||||
Net income (loss) | $ | 143,791 | $ | 119,981 | $ | (105,923 | ) | $ | 451,779 | $ | 257,692 | ||||||||||||||
Net income (loss) per common share: | |||||||||||||||||||||||||
Basic | $ | 0.80 | $ | 0.65 | $ | (0.54 | ) | $ | 2.41 | $ | 1.30 | ||||||||||||||
Diluted | $ | 0.79 | $ | 0.63 | $ | (0.54 | ) | $ | 2.35 | $ | 1.28 | ||||||||||||||
Weighted average common shares – basic | 178,958 | 185,744 | 196,010 | 187,672 | 198,069 | ||||||||||||||||||||
Weighted average common shares – diluted (6) | 181,520 | 190,505 | 196,010 | 192,605 | 201,641 | ||||||||||||||||||||
Cash dividend declared per common share | $ | 0.09 | $ | 0.09 | $ | 0.07 | $ | 0.36 | $ | 0.28 | |||||||||||||||
(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 | Twelve Months Ended | |||||||||||||||||||||
December 31, 2018 |
September 30, 2018 |
December 31, 2017 |
December 31, 2018 |
December 31, 2017 |
|||||||||||||||||||||
Provision for excess and obsolete inventory | $ | 1,720 | $ | 3,347 | $ | 1,690 | $ | 11,242 | $ | 8,844 | |||||||||||||||
Sale of previously written down inventory | (1,501 | ) | (1,013 | ) | (1,048 | ) | (6,679 | ) | (7,451 | ) | |||||||||||||||
$ | 219 | $ | 2,334 | $ | 642 | $ | 4,563 | $ | 1,393 | ||||||||||||||||
(3 | ) | Restructuring and other consists of: | Quarter Ended | Twelve Months Ended | |||||||||||||||||||||
December 31, 2018 |
September 30, 2018 |
December 31, 2017 |
December 31, 2018 |
December 31, 2017 |
|||||||||||||||||||||
Contingent consideration fair value adjustment | $ | 10,223 | $ | (768 | ) | $ | 5,973 | $ | 987 | $ | 7,820 | ||||||||||||||
Employee severance | 768 | 1,667 | 1,801 | 8,714 | 3,754 | ||||||||||||||||||||
Acquisition related expenses and compensation | 455 | 811 | – | 4,584 | – | ||||||||||||||||||||
Impairment of fixed assets | – | – | 1,124 | – | 1,124 | ||||||||||||||||||||
Other | – | – | 72 | 947 | 973 | ||||||||||||||||||||
Property insurance recovery, net | – | – | – | – | (4,309 | ) | |||||||||||||||||||
$ | 11,446 | $ | 1,710 | $ | 8,970 | $ | 15,232 | $ | 9,362 | ||||||||||||||||
(4 | ) | Interest and other (income) expense, includes: | Quarter Ended | Twelve Months Ended | |||||||||||||||||||||
December 31, 2018 |
September 30, 2018 |
December 31, 2017 |
December 31, 2018 |
December 31, 2017 |
|||||||||||||||||||||
Non-cash convertible debt interest | $ | 3,327 | $ | 3,286 | $ | 3,166 | $ | 13,064 | $ | 12,431 | |||||||||||||||
Pension actuarial (gain) loss | (3,512 | ) | 267 | (3,786 | ) | (3,316 | ) | (6,624 | ) | ||||||||||||||||
$ | (185 | ) | $ | 3,553 | $ | (620 | ) | $ | 9,748 | $ | 5,807 | ||||||||||||||
(5 | ) | For the quarter and twelve months ended December 31, 2018 income tax (benefit) provision includes a $52 million tax benefit related to the finalization of our U.S. toll tax liability. For the quarter and twelve months ended December 31, 2017, income tax provision included an expense of $186 million related to the estimated impact of the U.S. Tax Reform Act. | |||||||||||||||||||||||
(6 | ) | 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 December 31, 2018, September 30, 2018 and December 31, 2017, 0.9 million, 3.0 million and 3.3 million shares, respectively, have been included in diluted shares. For the twelve months ended December 31, 2018 and December 31, 2017, 2.7 million and 1.3 million shares, respectively, have been included in diluted shares. For the twelve months ended December 31, 2018 and December 31, 2017, diluted shares also included 0.5 million shares and 0.1 million shares, respectively, from the convertible note hedge transaction. | |||||||||||||||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) | |||||||||||||||||||||||||
December 31, 2018 |
December 31, 2017 |
||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||
Cash and cash equivalents | $ | 926,752 | $ | 429,843 | |||||||||||||||||||||
Marketable securities | 190,096 | 1,347,979 | |||||||||||||||||||||||
Accounts receivable, net | 291,267 | 272,783 | |||||||||||||||||||||||
Inventories, net | 153,541 | 107,525 | |||||||||||||||||||||||
Prepayments and other current assets | 170,817 | 112,151 | |||||||||||||||||||||||
Total current assets | 1,732,473 | 2,270,281 | |||||||||||||||||||||||
Property, plant and equipment, net | 279,821 | 268,447 | |||||||||||||||||||||||
Marketable securities | 87,731 | 125,926 | |||||||||||||||||||||||
Deferred tax assets | 70,858 | 84,026 | |||||||||||||||||||||||
Other assets | 11,508 | 12,275 | |||||||||||||||||||||||
Retirement plans assets | 16,883 | 17,491 | |||||||||||||||||||||||
Acquired intangible assets, net | 125,482 | 79,088 | |||||||||||||||||||||||
Goodwill | 381,850 | 252,011 | |||||||||||||||||||||||
Total assets | $ | 2,706,606 | $ | 3,109,545 | |||||||||||||||||||||
Liabilities | |||||||||||||||||||||||||
Accounts payable | $ | 100,688 | $ | 86,393 | |||||||||||||||||||||
Accrued employees’ compensation and withholdings | 148,566 | 141,694 | |||||||||||||||||||||||
Deferred revenue and customer advances | 78,427 | 83,614 | |||||||||||||||||||||||
Other accrued liabilities | 78,272 | 59,083 | |||||||||||||||||||||||
Contingent consideration | 34,865 | 24,497 | |||||||||||||||||||||||
Income taxes payable | 36,185 | 59,055 | |||||||||||||||||||||||
Total current liabilities | 477,003 | 454,336 | |||||||||||||||||||||||
Retirement plans liabilities | 117,456 | 119,776 | |||||||||||||||||||||||
Long-term deferred revenue and customer advances | 32,033 | 30,127 | |||||||||||||||||||||||
Deferred tax liabilities | 20,662 | 6,720 | |||||||||||||||||||||||
Long-term other accrued liabilities | 37,548 | 10,273 | |||||||||||||||||||||||
Long-term contingent consideration | 35,678 | 20,605 | |||||||||||||||||||||||
Long-term income taxes payable | 83,891 | 148,075 | |||||||||||||||||||||||
Long-term debt | 379,981 | 365,987 | |||||||||||||||||||||||
Total liabilities | 1,184,252 | 1,155,899 | |||||||||||||||||||||||
Shareholders’ equity | 1,522,354 | 1,953,646 | |||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 2,706,606 | $ | 3,109,545 | |||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) | |||||||||||||||||||||||||
Quarter Ended | Twelve Months Ended | ||||||||||||||||||||||||
December 31, 2018 |
December 31, 2017 |
December 31, 2018 |
December 31, 2017 |
||||||||||||||||||||||
Cash flows from operating activities: | |||||||||||||||||||||||||
Net income (loss) | $ | 143,791 | $ | (105,923 | ) | $ | 451,779 | $ | 257,692 | ||||||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||||||||||
Depreciation | 17,485 | 16,879 | 67,415 | 66,122 | |||||||||||||||||||||
Amortization | 12,900 | 9,640 | 45,809 | 41,953 | |||||||||||||||||||||
Stock-based compensation | 8,250 | 8,477 | 33,577 | 34,097 | |||||||||||||||||||||
Deferred taxes | 3,898 | 37,784 | 28,340 | 37,105 | |||||||||||||||||||||
Provision for excess and obsolete inventory | 1,720 | 1,690 | 11,242 | 8,844 | |||||||||||||||||||||
Contingent consideration fair value adjustment | 10,223 | 5,973 | 987 | 7,820 | |||||||||||||||||||||
Losses (gains) on investments | 3,914 | (953 | ) | 3,494 | (878 | ) | |||||||||||||||||||
Retirement plan actuarial gains | (3,512 | ) | (3,786 | ) | (3,316 | ) | (6,624 | ) | |||||||||||||||||
Property insurance recovery, net | – | – | – | (4,309 | ) | ||||||||||||||||||||
Other | 144 | 891 | 1,083 | 1,585 | |||||||||||||||||||||
Changes in operating assets and liabilities, net of businesses acquired: | |||||||||||||||||||||||||
Accounts receivable | 59,869 | (4,961 | ) | (17,938 | ) | (80,584 | ) | ||||||||||||||||||
Inventories | 4,619 | 21,190 | (29,498 | ) | 44,960 | ||||||||||||||||||||
Prepayments and other assets | (29,683 | ) | (5,108 | ) | (58,402 | ) | 2,254 | ||||||||||||||||||
Accounts payable and accrued expenses | (2,431 | ) | 38,276 | 13,693 | 43,574 | ||||||||||||||||||||
Deferred revenue and customer advances | 3,556 | (29,551 | ) | 13,379 | 4,984 | ||||||||||||||||||||
Retirement plans contributions | (1,090 | ) | (1,040 | ) | (4,334 | ) | (5,902 | ) | |||||||||||||||||
Income taxes | (47,277 | ) | 157,994 | (80,429 | ) | 173,802 | |||||||||||||||||||
Net cash provided by operating activities | 186,376 | 147,472 | 476,881 | 626,495 | |||||||||||||||||||||
Cash flows from investing activities: | |||||||||||||||||||||||||
Purchases of property, plant and equipment | (26,110 | ) | (32,128 | ) | (114,379 | ) | (105,375 | ) | |||||||||||||||||
Proceeds from government subsidy for property, plant and equipment | – | – | 7,920 | – | |||||||||||||||||||||
Purchases of marketable securities | (109,223 | ) | (355,394 | ) | (918,744 | ) | (1,391,917 | ) | |||||||||||||||||
Proceeds from sales of marketable securities | 2,958 | 84,577 | 846,122 | 527,746 | |||||||||||||||||||||
Proceeds from maturities of marketable securities | 336,339 | 228,426 | 1,270,439 | 701,681 | |||||||||||||||||||||
Proceeds from property insurance | – | – | – | 5,064 | |||||||||||||||||||||
Proceeds from life insurance | – | – | 1,126 | – | |||||||||||||||||||||
Acquisition of businesses, net of cash acquired | – | – | (169,474 | ) | – | ||||||||||||||||||||
Net cash provided by (used for) investing activities | 203,964 | (74,519 | ) | 923,010 | (262,801 | ) | |||||||||||||||||||
Cash flows from financing activities: | |||||||||||||||||||||||||
Issuance of common stock under stock purchase and stock option plans | 14 | 31 | 20,973 | 24,493 | |||||||||||||||||||||
Repurchase of common stock | (261,215 | ) | (48,482 | ) | (823,478 | ) | (200,304 | ) | |||||||||||||||||
Dividend payments | (16,002 | ) | (13,717 | ) | (67,322 | ) | (55,447 | ) | |||||||||||||||||
Payment related to net settlement of employee stock compensation awards | (182 | ) | (297 | ) | (20,023 | ) | (12,881 | ) | |||||||||||||||||
Payment of contingent consideration | – | – | (13,571 | ) | (1,050 | ) | |||||||||||||||||||
Net cash used for financing activities | (277,385 | ) | (62,465 | ) | (903,421 | ) | (245,189 | ) | |||||||||||||||||
Effects of exchange rate changes on cash and cash equivalents | (222 | ) | 678 | 439 | 3,454 | ||||||||||||||||||||
Increase in cash and cash equivalents | 112,733 | 11,166 | 496,909 | 121,959 | |||||||||||||||||||||
Cash and cash equivalents at beginning of period | 814,019 | 418,677 | 429,843 | 307,884 | |||||||||||||||||||||
Cash and cash equivalents at end of period | $ | 926,752 | $ | 429,843 | $ | 926,752 | $ | 429,843 | |||||||||||||||||
GAAP to Non-GAAP Earnings Reconciliation | ||||||||||||||||||||||||||||||||||||||||||||||||||
(In millions, except per share amounts) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Quarter Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2018 |
% of Net Revenues | September 30, 2018 |
% of Net Revenues | December 31, 2017 (1) |
% of Net Revenues | |||||||||||||||||||||||||||||||||||||||||||||
Net revenues | $ | 519.6 | $ | 566.8 | $ | 479.4 | ||||||||||||||||||||||||||||||||||||||||||||
Gross profit GAAP and non-GAAP | $ | 309.5 | 59.6 | % | $ | 333.7 | 58.9 | % | $ | 270.9 | 56.5 | % | ||||||||||||||||||||||||||||||||||||||
Income from operations – GAAP | $ | 112.3 | 21.6 | % | $ | 143.6 | 25.3 | % | $ | 94.6 | 19.7 | % | ||||||||||||||||||||||||||||||||||||||
Acquired intangible assets amortization | 10.6 | 2.0 | % | 11.1 | 2.0 | % | 7.4 | 1.5 | % | |||||||||||||||||||||||||||||||||||||||||
Restructuring and other (2) | 11.4 | 2.2 | % | 1.7 | 0.3 | % | 9.0 | 1.9 | % | |||||||||||||||||||||||||||||||||||||||||
Income from operations – non-GAAP | $ | 134.3 | 25.8 | % | $ | 156.4 | 27.6 | % | $ | 111.0 | 23.2 | % | ||||||||||||||||||||||||||||||||||||||
Net Income per Common Share | Net Income per Common Share | Net Income (Loss) per Common Share | ||||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2018 |
% of Net Revenues | Basic | Diluted | September 30, 2018 |
% of Net Revenues | Basic | Diluted | December 31, 2017 |
% of Net Revenues | Basic | Diluted | |||||||||||||||||||||||||||||||||||||||
Net income (loss) – GAAP | $ | 143.8 | 27.7 | % | $ | 0.80 | $ | 0.79 | $ | 120.0 | 21.2 | % | $ | 0.65 | $ | 0.63 | $ | (105.9 | ) | -22.1 | % | $ | (0.54 | ) | $ | (0.54 | ) | |||||||||||||||||||||||
Acquired intangible assets amortization | 10.6 | 2.0 | % | 0.06 | 0.06 | 11.1 | 2.0 | % | 0.06 | 0.06 | 7.4 | 1.5 | % | 0.04 | 0.04 | |||||||||||||||||||||||||||||||||||
Interest and other (3) | 3.3 | 0.6 | % | 0.02 | 0.02 | 3.3 | 0.6 | % | 0.02 | 0.02 | 3.2 | 0.7 | % | 0.02 | 0.02 | |||||||||||||||||||||||||||||||||||
Restructuring and other (2) | 11.4 | 2.2 | % | 0.06 | 0.06 | 1.7 | 0.3 | % | 0.01 | 0.01 | 9.0 | 1.9 | % | 0.05 | 0.05 | |||||||||||||||||||||||||||||||||||
Pension mark-to-market adjustment (3) | (3.5 | ) | -0.7 | % | (0.02 | ) | (0.02 | ) | 0.3 | 0.1 | % | 0.00 | 0.00 | (3.8 | ) | -0.8 | % | (0.02 | ) | (0.02 | ) | |||||||||||||||||||||||||||||
Exclude discrete tax adjustments (4) | (52.9 | ) | -10.2 | % | (0.30 | ) | (0.29 | ) | 0.3 | 0.1 | % | 0.00 | 0.00 | 184.4 | 38.5 | % | 0.94 | 0.94 | ||||||||||||||||||||||||||||||||
Non-GAAP tax adjustments | 0.3 | 0.1 | % | 0.00 | 0.00 | (3.4 | ) | -0.6 | % | (0.02 | ) | (0.02 | ) | (2.9 | ) | -0.6 | % | (0.01 | ) | (0.01 | ) | |||||||||||||||||||||||||||||
Convertible share adjustment | – | – | – | – | – | – | – | 0.01 | – | – | – | – | ||||||||||||||||||||||||||||||||||||||
Net income – non-GAAP | $ | 113.0 | 21.7 | % | $ | 0.63 | $ | 0.63 | $ | 133.3 | 23.5 | % | $ | 0.72 | $ | 0.71 | $ | 91.4 | 19.1 | % | $ | 0.47 | $ | 0.46 | ||||||||||||||||||||||||||
GAAP and non-GAAP weighted average common shares – basic | 179.0 | 185.7 | 196.0 | |||||||||||||||||||||||||||||||||||||||||||||||
GAAP weighted average common shares – diluted | 181.5 | 190.5 | 196.0 | |||||||||||||||||||||||||||||||||||||||||||||||
Include dilutive shares | – | – | 3.0 | |||||||||||||||||||||||||||||||||||||||||||||||
Exclude dilutive shares related to convertible note transaction | (0.9 | ) | (3.1 | ) | – | |||||||||||||||||||||||||||||||||||||||||||||
Non-GAAP weighted average common shares – diluted | 180.6 | 187.4 | 199.0 | |||||||||||||||||||||||||||||||||||||||||||||||
(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 | ) | Restructuring and other consists of: | ||||||||||||||||||||||||||||||||||||||||||||||||
Quarter Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2018 |
September 30, 2018 |
December 31, 2017 |
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Contingent consideration fair value adjustment | $ | 10.2 | $ | (0.8 | ) | $ | 6.0 | |||||||||||||||||||||||||||||||||||||||||||
Employee severance | 0.8 | 1.7 | 1.8 | |||||||||||||||||||||||||||||||||||||||||||||||
Acquisition related expenses and compensation | 0.5 | 0.8 | – | |||||||||||||||||||||||||||||||||||||||||||||||
Impairment of fixed assets | – | – | 1.1 | |||||||||||||||||||||||||||||||||||||||||||||||
Other | – | – | 0.1 | |||||||||||||||||||||||||||||||||||||||||||||||
$ | 11.4 | $ | 1.7 | $ | 9.0 | |||||||||||||||||||||||||||||||||||||||||||||
(3 | ) | For the quarters ended December 31, 2018, September 30, 2018 and December 31, 2017, adjustment to exclude non-cash convertible debt interest expense and adjustment to exclude actuarial (gains)losses recognized under GAAP in accordance with Teradyne’s mark-to-market pension accounting. | ||||||||||||||||||||||||||||||||||||||||||||||||
(4 | ) | For the quarters ended December 31, 2018, September 30, 2018 and December 31, 2017, adjustment to exclude discrete income tax items. For the quarter ended December 31, 2018, adjustment to treat the $52 million tax benefit related to the finalization of our U.S. toll tax liability as a discrete item. For the quarter ended December 31, 2017, adjustment to treat the $186 million expense related to the estimated impact of the U.S. Tax Reform Act, as a discrete item. | ||||||||||||||||||||||||||||||||||||||||||||||||
Twelve Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2018 |
% of Net Revenues | December 31, 2017 (1) |
% of Net Revenues | |||||||||||||||||||||||||||||||||||||||||||||||
Net Revenues | $ | 2,100.8 | $ | 2,136.6 | ||||||||||||||||||||||||||||||||||||||||||||||
Gross profit GAAP | $ | 1,220.4 | 58.1 | % | $ | 1,221.5 | 57.2 | % | ||||||||||||||||||||||||||||||||||||||||||
Inventory step-up | 0.4 | 0.0 | % | – | – | |||||||||||||||||||||||||||||||||||||||||||||
Gross profit non-GAAP | $ | 1,220.8 | 58.1 | % | $ | 1,221.5 | 57.2 | % | ||||||||||||||||||||||||||||||||||||||||||
Income from operations – GAAP | $ | 473.8 | 22.6 | % | $ | 525.3 | 24.6 | % | ||||||||||||||||||||||||||||||||||||||||||
Acquired intangible assets amortization | 39.2 | 1.9 | % | 30.5 | 1.4 | % | ||||||||||||||||||||||||||||||||||||||||||||
Restructuring and other (2) | 15.2 | 0.7 | % | 9.4 | 0.4 | % | ||||||||||||||||||||||||||||||||||||||||||||
Inventory step-up | 0.4 | 0.0 | % | – | – | |||||||||||||||||||||||||||||||||||||||||||||
Income from operations – non-GAAP | $ | 528.6 | 25.2 | % | $ | 565.2 | 26.5 | % | ||||||||||||||||||||||||||||||||||||||||||
Net Income per Common Share |
Net Income per Common Share |
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December 31, 2018 |
% of Net Revenues | Basic | Diluted | December 31, 2017 |
% of Net Revenues | Basic | Diluted | |||||||||||||||||||||||||||||||||||||||||||
Net income – GAAP | $ | 451.8 | 21.5 | % | $ | 2.41 | $ | 2.35 | $ | 257.7 | 12.1 | % | $ | 1.30 | $ | 1.28 | ||||||||||||||||||||||||||||||||||
Acquired intangible assets amortization | 39.2 | 1.9 | % | 0.21 | 0.20 | 30.5 | 1.4 | % | 0.15 | 0.15 | ||||||||||||||||||||||||||||||||||||||||
Interest and other (3) | 13.1 | 0.6 | % | 0.07 | 0.07 | 12.4 | 0.6 | % | 0.06 | 0.06 | ||||||||||||||||||||||||||||||||||||||||
Restructuring and other (2) | 15.2 | 0.7 | % | 0.08 | 0.08 | 9.4 | 0.4 | % | 0.05 | 0.05 | ||||||||||||||||||||||||||||||||||||||||
Inventory step-up | 0.4 | 0.0 | % | 0.00 | 0.00 | – | – | – | – | |||||||||||||||||||||||||||||||||||||||||
Pension mark-to-market adjustment (3) | (3.3 | ) | -0.2 | % | (0.02 | ) | (0.02 | ) | (6.3 | ) | -0.3 | % | (0.03 | ) | (0.03 | ) | ||||||||||||||||||||||||||||||||||
Exclude discrete tax adjustments (4) | (59.4 | ) | -2.8 | % | (0.32 | ) | (0.31 | ) | 178.3 | 8.3 | % | 0.90 | 0.88 | |||||||||||||||||||||||||||||||||||||
Non-GAAP tax adjustments | (8.4 | ) | -0.4 | % | (0.04 | ) | (0.04 | ) | (12.8 | ) | -0.6 | % | (0.06 | ) | (0.06 | ) | ||||||||||||||||||||||||||||||||||
Convertible share adjustment | – | – | – | 0.04 | – | – | – | 0.01 | ||||||||||||||||||||||||||||||||||||||||||
Net income – non-GAAP | $ | 448.6 | 21.4 | % | $ | 2.39 | $ | 2.37 | $ | 469.2 | 22.0 | % | $ | 2.37 | $ | 2.34 | ||||||||||||||||||||||||||||||||||
GAAP and non-GAAP weighted average common shares – basic | 187.7 | 198.1 | ||||||||||||||||||||||||||||||||||||||||||||||||
GAAP weighted average common shares – diluted | 192.6 | 201.6 | ||||||||||||||||||||||||||||||||||||||||||||||||
Exclude dilutive shares from convertible note | (3.2 | ) | (1.3 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Non-GAAP weighted average common shares – diluted | 189.4 | 200.3 | ||||||||||||||||||||||||||||||||||||||||||||||||
(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 | ) | Restructuring and other consists of: | ||||||||||||||||||||||||||||||||||||||||||||||||
Twelve Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2018 |
December 31, 2017 |
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Employee severance | $ | 8.7 | $ | 3.8 | ||||||||||||||||||||||||||||||||||||||||||||||
Acquisition related expenses and compensation | 4.6 | – | ||||||||||||||||||||||||||||||||||||||||||||||||
Contingent consideration fair value adjustment | 1.0 | 7.8 | ||||||||||||||||||||||||||||||||||||||||||||||||
Other | 0.9 | 1.0 | – | |||||||||||||||||||||||||||||||||||||||||||||||
Impairment of fixed assets | – | 1.1 | ||||||||||||||||||||||||||||||||||||||||||||||||
Property insurance recovery, net | – | (4.3 | ) | |||||||||||||||||||||||||||||||||||||||||||||||
$ | 15.2 | $ | 9.4 | |||||||||||||||||||||||||||||||||||||||||||||||
(3 | ) | For the twelve months ended December 31, 2018 and December 31, 2017, interest and other included non-cash convertible debt interest expense. For the twelve months ended December 31, 2018 and December 31, 2017, adjustments to exclude actuarial gains recognized under GAAP in accordance with Teradyne’s mark-to-market pension accounting. | ||||||||||||||||||||||||||||||||||||||||||||||||
(4 | ) | For the twelve months ended December 31, 2018 and December 31, 2017, adjustment to exclude discrete income tax items. For the twelve months ended December 31, 2018, adjustment to treat the $52 million tax benefit related to the finalization of our U.S. toll tax liability as a discrete item. For the twelve months ended December 31, 2017, adjustment to treat the $186 million expense related to the estimated impact of the U.S. Tax Reform Act, as a discrete item. | ||||||||||||||||||||||||||||||||||||||||||||||||
GAAP to Non-GAAP Reconciliation of First Quarter 2019 guidance: | ||||||||||||||||||||||||||||||||||||||||||||||||||
GAAP and non-GAAP first quarter revenue guidance: | $460 million | to | $490 million | |||||||||||||||||||||||||||||||||||||||||||||||
GAAP net income per diluted share | $ | 0.31 | $ | 0.39 | ||||||||||||||||||||||||||||||||||||||||||||||
Exclude acquired intangible assets amortization | 0.06 | 0.06 | ||||||||||||||||||||||||||||||||||||||||||||||||
Exclude non-cash convertible debt interest | 0.02 | 0.02 | ||||||||||||||||||||||||||||||||||||||||||||||||
Tax effect of non-GAAP adjustments | (0.02 | ) | (0.02 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Convertible share adjustment | 0.01 | 0.01 | ||||||||||||||||||||||||||||||||||||||||||||||||
Non-GAAP net income per diluted share | $ | 0.39 | $ | 0.47 | ||||||||||||||||||||||||||||||||||||||||||||||
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CONTACT: Contact: Teradyne, Inc. Andy Blanchard 978-370-2425 Vice President of Corporate Relations