Teradyne Reports Third Quarter 2018 Results
- 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 | |||
NORTH READING, Mass., Oct. 23, 2018 (GLOBE NEWSWIRE) -- Teradyne, Inc. (NYSE: TER) reported revenue of $567 million for the third quarter of 2018 of which $417 million was in Semiconductor Test, $66 million in Industrial Automation, $50 million in System Test, and $34 million in Wireless Test. GAAP net profit for the third quarter was $120.0 million or $0.63 per diluted share. On a non-GAAP basis, Teradyne’s net income in the third quarter was $133.3 million, or $0.71 per diluted share, which excluded acquired intangible asset amortization, non-cash convertible debt interest, restructuring and other charges and included the related tax impact on non-GAAP adjustments.
"Increased third quarter sales, combined with favorable product mix, drove earnings above our guidance," said President and CEO Mark Jagiela. "In Semiconductor Test, sales increased 5% compared to Q3'17 due to continued strength in automotive and industrial chip test markets combined with increased memory test demand for our expanded Magnum product line. Universal Robots (UR) growth, combined with 2018 acquisitions MiR and Energid, drove our Industrial Automation sales up 64% compared to Q3'17. Growing traction for UR’s next generation e-Series Cobots and expanded distribution for MiR's mobile platform powered the growth and positions us for a strong finish to the year.
With expected strong Industrial Automation and Semiconductor Test shipments, the mid-point of our Q4 guidance delivers another year with over $2 billion in sales and over $2 of earnings per share."
Guidance for the fourth quarter of 2018 is revenue of $480 million to $510 million, with GAAP net income of $0.39 to $0.46 per diluted share and non-GAAP net income of $0.46 to $0.54 per diluted share. Non-GAAP guidance excludes acquired intangible asset amortization, non-cash convertible debt interest, restructuring and other charges and includes the related tax impact on non-GAAP adjustments.
Webcast A conference call to discuss the third quarter results, along with management's business outlook, will follow at 10:00 a.m. ET, Wednesday, October 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 investors.teradyne.com.
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 TeradyneTeradyne (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, autonomous mobile robots and sensing and simulation software, used by global manufacturing and industrial customers to improve quality and increase manufacturing efficiency. In 2017, Teradyne had revenue of $2.14 billion and currently employs approximately 4,800 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 StatementThis 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 July 1, 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 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 | |||||||||||||||||||||
| 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 | |||||||||||||||||||||||||||||||||||||||||||||||
| 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. | ||||||||||||||||||||||||||||||||||||||||||||||||
| (2) | Restructuring and other consists of: | ||||||||||||||||||||||||||||||||||||||||||||||||
| Quarter Ended | |||||||||||||||||||||||||||||||||||||||||||||||||
| September 30, 2018 | July 1, 2018 | October 1, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||
| 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. | ||||||||||||||||||||||||||||||||||||||||||||||||
| (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 | ||||||||||||||||||||||||||||||||||||||||||||||||
| 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 | $ | 1.81 | |||||||||||||||||||||||||||||||||
| Acquired intangible assets amortization | 28.6 | 1.8 | % | 0.15 | 0.15 | 23.1 | 1.4 | % | 0.12 | 0.11 | |||||||||||||||||||||||||||||||||||||||
| Interest and other (3) | 9.7 | 0.6 | % | 0.05 | 0.05 | 9.3 | 0.6 | % | 0.05 | 0.05 | |||||||||||||||||||||||||||||||||||||||
| Restructuring and other (2) | 3.8 | 0.2 | % | 0.02 | 0.02 | 0.4 | 0.0 | % | 0.00 | 0.00 | |||||||||||||||||||||||||||||||||||||||
| Inventory step-up | 0.4 | 0.0 | % | 0.00 | 0.00 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||
| Pension mark-to-market adjustment (3) | 0.2 | 0.0 | % | 0.00 | 0.00 | (2.5 | ) | -0.2 | % | (0.01 | ) | (0.01 | ) | ||||||||||||||||||||||||||||||||||||
| Exclude discrete tax adjustments (4) | (6.5 | ) | -0.4 | % | (0.03 | ) | (0.03 | ) | (6.1 | ) | -0.4 | % | (0.03 | ) | (0.03 | ) | |||||||||||||||||||||||||||||||||
| Non-GAAP tax adjustments | (8.7 | ) | -0.6 | % | (0.05 | ) | (0.04 | ) | (9.9 | ) | -0.6 | % | (0.05 | ) | (0.05 | ) | |||||||||||||||||||||||||||||||||
| Convertible share adjustment | - | - | - | 0.03 | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Net income - non-GAAP | $ | 335.5 | 21.2 | % | $ | 1.76 | $ | 1.74 | $ | 377.9 | 22.8 | % | $ | 1.90 | $ | 1.88 | |||||||||||||||||||||||||||||||||
| GAAP and non-GAAP weighted average common shares - basic | 190.6 | 198.8 | |||||||||||||||||||||||||||||||||||||||||||||||
| GAAP weighted average common shares - diluted | 196.3 | 201.4 | |||||||||||||||||||||||||||||||||||||||||||||||
| Exclude dilutive shares from convertible note | (4.0 | ) | (0.6 | ) | |||||||||||||||||||||||||||||||||||||||||||||
| Non-GAAP weighted average common shares - diluted | 192.3 | 200.8 | |||||||||||||||||||||||||||||||||||||||||||||||
| (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: | ||||||||||||||||||||||||||||||||||||||||||||||||
| Nine Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||
| September 30, 2018 | October 1, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Employee severance | $ | 7.9 | $ | 2.0 | |||||||||||||||||||||||||||||||||||||||||||||
| Acquisition related expenses and compensation | 4.1 | - | |||||||||||||||||||||||||||||||||||||||||||||||
| Other | 0.9 | 1.7 | |||||||||||||||||||||||||||||||||||||||||||||||
| Contingent consideration fair value adjustment | (9.2 | ) | 1.8 | ||||||||||||||||||||||||||||||||||||||||||||||
| Property insurance recovery | - | (5.1 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
| $ | 3.8 | $ | 0.4 | ||||||||||||||||||||||||||||||||||||||||||||||
| (3) | For the nine months ended September 30, 2018 and October 1, 2017, Interest and other included non-cash convertible debt interest expense. For the nine months ended September 30, 2018 and October 1, 2017, adjustments to exclude actuarial gains recognized under GAAP in accordance with Teradyne's mark-to-market pension accounting policy. | ||||||||||||||||||||||||||||||||||||||||||||||||
| (4) | For the nine months ended September 30, 2018 and October 1, 2017, adjustment to exclude discrete income tax items. | ||||||||||||||||||||||||||||||||||||||||||||||||
| GAAP to Non-GAAP Reconciliation of Fourth Quarter 2018 guidance: | |||||||||||||||||||||||||||||||||||||||||||||||||
| GAAP and non-GAAP fourth quarter revenue guidance: | $480 million | to | $510 million | ||||||||||||||||||||||||||||||||||||||||||||||
| GAAP net income per diluted share | $ | 0.39 | $ | 0.46 | |||||||||||||||||||||||||||||||||||||||||||||
| Exclude acquired intangible assets amortization | 0.06 | 0.06 | |||||||||||||||||||||||||||||||||||||||||||||||
| Exclude non-cash convertible debt interest | 0.02 | 0.02 | |||||||||||||||||||||||||||||||||||||||||||||||
| Exclude restructuring and other | 0.01 | 0.01 | |||||||||||||||||||||||||||||||||||||||||||||||
| Tax effect of non-GAAP adjustments | (0.02 | ) | (0.02 | ) | |||||||||||||||||||||||||||||||||||||||||||||
| Convertible share adjustment | 0.01 | 0.01 | |||||||||||||||||||||||||||||||||||||||||||||||
| Non-GAAP net income per diluted share | $ | 0.46 | $ | 0.54 | |||||||||||||||||||||||||||||||||||||||||||||
| For press releases and other information of interest to investors, please visit Teradyne's homepage at http://www.teradyne.com. | |||||||||||||||||||||||||||||||||||||||||||||||||
| Contact: Teradyne, Inc. | |||||||||||||||||||||||||||||||||||||||||||||||||
| Andy Blanchard 978-370-2425 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Vice President of Corporate Relations | |||||||||||||||||||||||||||||||||||||||||||||||||
