For more information, contact:
Andrew Blanchard
Investor Relations
Tel 978.370.2425
investorrelations@teradyne.com
| TERADYNE, INC. REPORT FOR THIRD FISCAL QUARTER OF 2020 | |||||||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||||
| (In thousands, except per share amounts) | |||||||||||||||||||||
| Quarter Ended | Nine Months Ended | ||||||||||||||||||||
|
September 27,
2020 |
June 28,
2020 |
September 29,
2019 |
September 27,
2020 |
September 29,
2019 | |||||||||||||||||
| Net revenues | $ | 819,484 | $ | 838,661 | $ | 582,038 | $ | 2,362,500 | $ | 1,640,315 | |||||||||||
| Cost of revenues (exclusive of acquired intangible assets amortization shown separately below) (1) | 360,556 | 367,188 | 237,000 | 1,026,549 | 683,724 | ||||||||||||||||
| Gross profit | 458,928 | 471,473 | 345,038 | 1,335,951 | 956,591 | ||||||||||||||||
| Operating expenses: | |||||||||||||||||||||
| Selling and administrative (2) | 115,840 | 113,259 | 109,166 | 340,488 | 319,990 | ||||||||||||||||
| Engineering and development | 94,909 | 94,102 | 77,804 | 274,170 | 236,030 | ||||||||||||||||
| Acquired intangible assets amortization | 6,219 | 8,941 | 9,647 | 25,052 | 30,363 | ||||||||||||||||
| Restructuring and other (3) | (27,701 | ) | 37,222 | (6,500 | ) | 1,915 | (11,792 | ) | |||||||||||||
| Operating expenses | 189,267 | 253,524 | 190,117 | 641,625 | 574,591 | ||||||||||||||||
| Income from operations | 269,661 | 217,949 | 154,921 | 694,326 | 382,000 | ||||||||||||||||
| Interest and other expense (4) | 5,930 | 658 | 3,188 | 16,237 | 5,111 | ||||||||||||||||
| Income before income taxes | 263,731 | 217,291 | 151,733 | 678,089 | 376,889 | ||||||||||||||||
| Income tax provision | 41,013 | 28,383 | 15,873 | 90,274 | 34,494 | ||||||||||||||||
| Net income | $ | 222,718 | $ | 188,908 | $ | 135,860 | $ | 587,815 | $ | 342,395 | |||||||||||
| Net income per common share: | |||||||||||||||||||||
| Basic | $ | 1.34 | $ | 1.14 | $ | 0.80 | $ | 3.54 | $ | 2.00 | |||||||||||
| Diluted | $ | 1.21 | $ | 1.05 | $ | 0.75 | $ | 3.23 | $ | 1.92 | |||||||||||
| Weighted average common shares - basic | 166,014 | 165,789 | 169,641 | 166,131 | 171,471 | ||||||||||||||||
| Weighted average common shares - diluted (5) | 184,338 | 180,257 | 180,494 | 181,777 | 178,685 | ||||||||||||||||
| Cash dividend declared per common share | $ | 0.10 | $ | 0.10 | $ | 0.09 | $ | 0.30 | $ | 0.27 | |||||||||||
| (1 | ) | Cost of revenues includes: | Quarter Ended | Nine Months Ended | |||||||||||||||||
|
September 27,
2020 |
June 28,
2020 |
September 29,
2019 |
September 27,
2020 |
September 29,
2019 | |||||||||||||||||
| Provision for excess and obsolete inventory | $ | 3,479 | $ | 5,580 | $ | 3,049 | $ | 13,116 | $ | 8,848 | |||||||||||
| Sale of previously written down inventory | (310 | ) | (337 | ) | (821 | ) | (1,722 | ) | (1,962 | ) | |||||||||||
| Inventory step-up | 121 | 121 | - | 360 | 383 | ||||||||||||||||
| $ | 3,290 | $ | 5,364 | $ | 2,228 | $ | 11,754 | $ | 7,269 | ||||||||||||
| (2 | ) | For the quarter and nine months ended September 29, 2019, selling and administrative expenses include an equity charge of $2,109 for the modification of Teradyne's retired CFO's outstanding equity awards to allow continued vesting and maintain the original term in connection with his July 17, 2019 retirement. | |||||||||||||||||||
| (3 | ) | Restructuring and other consists of: | Quarter Ended | Nine Months Ended | |||||||||||||||||
|
September 27,
2020 |
June 28,
2020 |
September 29,
2019 |
September 27,
2020 |
September 29,
2019 | |||||||||||||||||
| Contingent consideration fair value adjustment | $ | (27,206 | ) | $ | 29,259 | $ | (7,759 | ) | $ | (7,967 | ) | $ | (16,460 | ) | |||||||
| Acquisition related expenses and compensation | (1,086 | ) | 3,145 | 451 | 3,418 | 2,258 | |||||||||||||||
| Employee severance | 456 | 36 | 808 | 1,220 | 2,410 | ||||||||||||||||
| Contract termination settlement fee | - | 4,000 | - | 4,000 | - | ||||||||||||||||
| Other | 135 | 782 | - | 1,244 | - | ||||||||||||||||
| $ | (27,701 | ) | $ | 37,222 | $ | (6,500 | ) | $ | 1,915 | $ | (11,792 | ) | |||||||||
| (4 | ) | Interest and other includes: | Quarter Ended | Nine Months Ended | |||||||||||||||||
|
September 27,
2020 |
June 28,
2020 |
September 29,
2019 |
September 27,
2020 |
September 29,
2019 | |||||||||||||||||
| Non-cash convertible debt interest | $ | 3,629 | $ | 3,584 | $ | 3,453 | $ | 10,752 | $ | 10,231 | |||||||||||
| Pension actuarial losses (gains) | 2,688 | (99 | ) | - | 2,589 | 448 | |||||||||||||||
| $ | 6,317 | $ | 3,485 | $ | 3,453 | $ | 13,341 | $ | 10,679 | ||||||||||||
| (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 27, 2020, June 28, 2020 and September 29, 2019, 9.2 million, 7.6 million and 5.8 million shares, respectively, have been included in diluted shares. For the nine months ended September 27, 2020 and September 29, 2019, 8.0 million and 4.1 million shares, respectively, have been included in diluted shares. For the quarters ended September 27, 2020, June 28, 2020 and September 29, 2019, diluted shares also included 7.8 million, 5.8 million and 3.6 million shares, respectively from the convertible note hedge transaction. For the nine months ended September 27, 2020 and September 29, 2019, diluted shares also included 6.4 million and 1.8 million shares, respectively, from the convertible note hedge transaction. | |||||||||||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) | |||||||||||||||||||||
|
September 27,
2020 |
December 31,
2019 | ||||||||||||||||||||
| Assets | |||||||||||||||||||||
| Cash and cash equivalents | $ | 945,180 | $ | 773,924 | |||||||||||||||||
| Marketable securities | 287,789 | 137,303 | |||||||||||||||||||
| Accounts receivable, net | 587,243 | 362,368 | |||||||||||||||||||
| Inventories, net | 191,317 | 196,691 | |||||||||||||||||||
| Prepayments and other current assets | 232,103 | 188,598 | |||||||||||||||||||
| Total current assets | 2,243,632 | 1,658,884 | |||||||||||||||||||
| Property, plant and equipment, net | 386,170 | 320,216 | |||||||||||||||||||
| Operating lease right-of-use assets, net | 54,724 | 57,539 | |||||||||||||||||||
| Marketable securities | 108,254 | 104,490 | |||||||||||||||||||
| Deferred tax assets | 78,243 | 75,185 | |||||||||||||||||||
| Retirement plans assets | 14,915 | 18,457 | |||||||||||||||||||
| Other assets | 11,650 | 10,332 | |||||||||||||||||||
| Acquired intangible assets, net | 103,672 | 125,480 | |||||||||||||||||||
| Goodwill | 435,252 | 416,431 | |||||||||||||||||||
| Total assets | $ | 3,436,512 | $ | 2,787,014 | |||||||||||||||||
| Liabilities | |||||||||||||||||||||
| Accounts payable | $ | 150,427 | $ | 126,617 | |||||||||||||||||
| Accrued employees' compensation and withholdings | 175,286 | 163,883 | |||||||||||||||||||
| Deferred revenue and customer advances | 129,438 | 104,876 | |||||||||||||||||||
| Other accrued liabilities | 117,108 | 70,871 | |||||||||||||||||||
| Operating lease liabilities | 20,311 | 19,476 | |||||||||||||||||||
| Contingent consideration | - | 9,106 | |||||||||||||||||||
| Income taxes payable | 79,270 | 44,200 | |||||||||||||||||||
| Total current liabilities | 671,840 | 539,029 | |||||||||||||||||||
| Retirement plans liabilities | 134,650 | 134,471 | |||||||||||||||||||
| Long-term deferred revenue and customer advances | 59,099 | 45,974 | |||||||||||||||||||
| Long-term contingent consideration | 22,531 | 30,599 | |||||||||||||||||||
| Long-term other accrued liabilities | 20,141 | 19,535 | |||||||||||||||||||
| Deferred tax liabilities | 11,462 | 14,070 | |||||||||||||||||||
| Long-term operating lease liabilities | 42,137 | 45,849 | |||||||||||||||||||
| Long-term income taxes payable | 74,930 | 82,642 | |||||||||||||||||||
| Debt | 406,178 | 394,687 | |||||||||||||||||||
| Total liabilities | 1,442,968 | 1,306,856 | |||||||||||||||||||
| Shareholders' equity | 1,993,544 | 1,480,158 | |||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 3,436,512 | $ | 2,787,014 | |||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) | |||||||||||||||||||||
| Quarter Ended | Nine Months Ended | ||||||||||||||||||||
|
September 27,
2020 |
September 29,
2019 |
September 27,
2020 |
September 29,
2019 | ||||||||||||||||||
| Cash flows from operating activities: | |||||||||||||||||||||
| Net income | $ | 222,718 | $ | 135,860 | $ | 587,815 | $ | 342,395 | |||||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||||||
| Depreciation | 19,806 | 17,626 | 58,111 | 51,508 | |||||||||||||||||
| Amortization | 10,343 | 11,873 | 36,577 | 36,849 | |||||||||||||||||
| Stock-based compensation | 11,661 | 10,713 | 33,028 | 28,822 | |||||||||||||||||
| Provision for excess and obsolete inventory | 3,479 | 3,049 | 13,116 | 8,848 | |||||||||||||||||
| Retirement plan actuarial losses | 2,688 | - | 2,589 | 448 | |||||||||||||||||
| Contingent consideration fair value adjustment | (27,206 | ) | (7,759 | ) | (7,967 | ) | (16,460 | ) | |||||||||||||
| Gains on investments | (3,046 | ) | (417 | ) | (3,515 | ) | (4,158 | ) | |||||||||||||
| Deferred taxes | 2,616 | (3,492 | ) | (4,547 | ) | (2,977 | ) | ||||||||||||||
| Other | 225 | 181 | 750 | 610 | |||||||||||||||||
| Changes in operating assets and liabilities, net of businesses acquired: | |||||||||||||||||||||
| Accounts receivable | 109,025 | 12,689 | (222,015 | ) | (66,789 | ) | |||||||||||||||
| Inventories | 20,726 | (11,696 | ) | 16,998 | (14,143 | ) | |||||||||||||||
| Prepayments and other assets | 8,728 | 949 | (40,751 | ) | (16,118 | ) | |||||||||||||||
| Accounts payable and other liabilities | (32,020 | ) | 35,231 | 81,557 | 20,807 | ||||||||||||||||
| Deferred revenue and customer advances | 7,934 | 11,953 | 36,589 | 27,779 | |||||||||||||||||
| Retirement plans contributions | (1,383 | ) | (1,361 | ) | (3,884 | ) | (3,775 | ) | |||||||||||||
| Income taxes | (13,782 | ) | (16,251 | ) | 24,060 | (31,224 | ) | ||||||||||||||
| Net cash provided by operating activities | 342,512 | 199,148 | 608,511 | 362,422 | |||||||||||||||||
| Cash flows from investing activities: | |||||||||||||||||||||
| Purchases of property, plant and equipment | (62,858 | ) | (37,092 | ) | (146,872 | ) | (96,048 | ) | |||||||||||||
| Purchases of marketable securities | (188,880 | ) | (121,358 | ) | (488,428 | ) | (605,539 | ) | |||||||||||||
| Proceeds from maturities of marketable securities | 126,423 | 160,279 | 309,407 | 393,472 | |||||||||||||||||
| Proceeds from sales of marketable securities | 5,950 | 17,820 | 32,611 | 60,274 | |||||||||||||||||
| Proceeds from life insurance | - | 2,639 | 546 | 2,912 | |||||||||||||||||
| Purchase of investments and acquisition of businesses, net of cash acquired | - | - | 149 | (21,970 | ) | ||||||||||||||||
| Net cash (used for) provided by investing activities | (119,365 | ) | 22,288 | (292,587 | ) | (266,899 | ) | ||||||||||||||
| Cash flows from financing activities: | |||||||||||||||||||||
| Issuance of common stock under stock purchase and stock option plans | 13,771 | 14,191 | 26,528 | 29,280 | |||||||||||||||||
| Dividend payments | (16,604 | ) | (15,250 | ) | (49,870 | ) | (46,269 | ) | |||||||||||||
| Payments related to net settlement of employee stock compensation awards | (216 | ) | (104 | ) | (22,735 | ) | (14,550 | ) | |||||||||||||
| Repurchase of common stock | - | (121,560 | ) | (88,465 | ) | (368,782 | ) | ||||||||||||||
| Payments of contingent consideration | - | - | (8,852 | ) | (27,615 | ) | |||||||||||||||
| Net cash used for financing activities | (3,049 | ) | (122,723 | ) | (143,394 | ) | (427,936 | ) | |||||||||||||
| Effects of exchange rate changes on cash and cash equivalents | (349 | ) | 119 | (1,274 | ) | (400 | ) | ||||||||||||||
| Increase (decrease) in cash and cash equivalents | 219,749 | 98,832 | 171,256 | (332,813 | ) | ||||||||||||||||
| Cash and cash equivalents at beginning of period | 725,431 | 495,107 | 773,924 | 926,752 | |||||||||||||||||
| Cash and cash equivalents at end of period | $ | 945,180 | $ | 593,939 | $ | 945,180 | $ | 593,939 | |||||||||||||
