Teradyne Reports Fourth Quarter and Fiscal Year 2019 Results

Globe Newswire 22-Jan-2020 5:02 PM

• Revenue of $655 million in Q4'19, growth of 26% from Q4'18
• Full year 2019 revenue grew 9%, GAAP EPS 14%, Non-GAAP EPS 21%
• Strong Semiconductor Test and LitePoint Wireless shipments drove Q4 revenue above the high end of guidance
• Industrial Automation revenue growth of 5% in Q4, 14% in 2019
• Quarterly dividend increased 11% to $0.10 beginning in Q1'20
• Board authorized a $1 billion share repurchase program, expect to repurchase a minimum of $250 million in shares in 2020

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NORTH READING, Mass., Jan. 22, 2020 (GLOBE NEWSWIRE) -- Teradyne, Inc. (NASDAQ:TER) reported revenue of $655 million for the fourth quarter of 2019 of which $439 million was in Semiconductor Test, $88 million in Industrial Automation (IA), $83 million in System Test, and $45 million in Wireless Test. GAAP net income for the fourth quarter was $136.8 million or $0.75 per diluted share. On a non-GAAP basis, Teradyne's net income in the fourth quarter was $152.7 million, or $0.88 per diluted share, which excluded acquired intangible asset amortization, pension actuarial losses, restructuring and other charges, non-cash convertible debt interest, and included the related tax impact on non-GAAP adjustments.

"We delivered revenue and profits above plan in the fourth quarter on higher than expected memory and wireless test demand combined with continued 5G infrastructure test demand," said CEO and President Mark Jagiela. "For the full year, we increased total company revenue 9% and non-GAAP earnings 21%, our sixth consecutive year of earnings growth. Despite the headwinds in global industrial automation investment, Universal Robots grew revenue 6% for the year and MiR grew 43% on a pro-forma basis. In Q4, we strengthened our IA portfolio with the addition of AutoGuide and their innovative autonomous mobile forklifts and tuggers to our line-up of easy to deploy, safe, and fast ROI automation products." 

Jagiela continued, "Beyond the strong financial performance, 2019 was a significant year for the company strategically as we introduced major new products in growing segments across our test and industrial automation businesses. These products expand our served markets and position us for continued growth in 2020. Our Q1 outlook reflects the impact of customer production ramps from several design wins using these new products along with early test demand for smartphone related silicon and storage test capacity expansions. We expect this revenue profile to continue through the second quarter before tapering in the second half of the year."

Teradyne's Board of Directors declared an 11% increase to the quarterly cash dividend to $0.10 per share, payable on March 20, 2020 to shareholders of record as of the close of business on February 21, 2020. The Board also authorized a $1 billion share repurchase program and the company expects to repurchase a minimum of $250 million of its common stock in 2020.

Guidance for the first quarter of 2020 is revenue of $670 million to $710 million, with GAAP net income of $0.75 to $0.85 per diluted share and non-GAAP net income of $0.86 to $0.96 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 a.m. ET, Thursday, January 23. 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 a.m. ET. A replay will be available on the Teradyne investor site 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, 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. 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 "Investor Relations" and then selecting "Financials" and 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) brings high-quality innovations such as smart devices, life-saving medical equipment and data storage systems to market, faster. Its advanced test solutions for semiconductors, electronic systems, wireless devices and more ensure that products perform as they were designed. Its Industrial Automation offerings include collaborative and mobile robots that help manufacturers of all sizes improve productivity and lower costs. In 2019, Teradyne had revenue of $2.3 billion and today employs 5,400 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, and the impact of the U.S. 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, or the impact of the U.S. 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.

On May 16, 2019, Huawei and 68 of its affiliates, including HiSilicon, were added to the U.S. Department of Commerce Entity List under U.S. Export Administration Regulations (the "EAR"). This action by the U.S. Department of Commerce imposed new export licensing requirements on exports, re-exports, and in-country transfers of all U.S. - regulated products, software and technology to the designated Huawei entities.  While most of our products are not subject to the EAR and therefore not affected by the Entity List restrictions, some of our products are currently manufactured in the U.S. and thus subject to the Entity List restrictions.  Compliance with the current Entity List restrictions has not significantly impacted our sales. There have been recent news reports that the U.S. Department of Commerce plans to modify the U.S. EAR to expand the scope of the regulations to include more products that would become subject to the Entity List restrictions relating to Huawei and the designated Huawei entities including HiSilicon. These modified regulations, if implemented as currently reported, would impact our ability to continue to sell certain products directly to Huawei and HiSilicon, both of which are significant Teradyne customers. However, based on our understanding, these proposed modified regulations would not impact our sales to third party contract manufacturers used by Huawei and HiSilicon to manufacture and test semiconductor and other electronic devices.  Because the business environment for Huawei is both fluid and uncertain, there are also risks that Huawei and HiSilicon may have less demand for our products and/or may purchase products from our competitors who are not impacted by the U.S. regulations. Until these or any new regulations become public and effective, we will not know the extent of the impact on our business with Huawei and HiSilicon.  However, it is possible that these modified regulations and any other additional regulations that may be implemented by the U.S. Department of Commerce or other government agency would have a material impact on our business and financial results.

Important factors that could cause actual results, earnings per share, use of cash, dividend payments, repurchases of common stock, or payment of the senior convertible notes 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 or the repurchase of common stock 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; compliance with trade protection measures or export restrictions; the impact of U.S. Department of Commerce or other government agency regulations relating to Huawei and HiSilicon; 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, 2018 and the Quarterly Report on Form 10-Q for the period ended September 29, 2019. 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.