Teradyne Reports 48% Sequential Growth in First Quarter 2015 Orders; Expects Sequential Revenue and Earnings Growth in Second Quarter

Teradyne, Inc. (NYSE: TER) reported revenue of $342 million for the first quarter of 2015 of which $271 million was in Semiconductor Test, $37 million in System Test and $34 million in Wireless Test. On a non-GAAP basis, Teradyne’s net income in the first quarter was $37.6 million, or $0.17 per diluted share, which excluded acquired intangible asset amortization, gain on the sale of an equity investment and discrete income tax adjustments. GAAP net income for the first quarter was $32.8 million or $0.15 per share.

Orders in the first quarter of 2015 were $490 million of which $397 million were in Semiconductor Test, $66 million in System Test and $27 million in Wireless Test.

“A combination of new product success and strong demand in Semiconductor and Storage test drove company orders up nearly 50% sequentially," said CEO and President Mark Jagiela. "In Memory test, orders more than doubled sequentially due to increasing test demand for higher speed memories. We achieved record orders for both our recently introduced Magnum V memory test system and our UltraFLEX-M high- speed DRAM test system. In System-on-a-Chip test, orders grew 66% based on a combination of the success of our new IP750Ex-HD system for image sensor test, continued strength in mobile processors, and growing demand in analog test. In Storage test, our new Saturn test system also booked record orders as lingering industry idle capacity has been absorbed and continued growth in cloud and enterprise storage drove new demand. Overall, while the full year test demand outlook remains mixed, given the substantial growth in our first quarter orders, we’re increasing our second quarter production plans to meet customer capacity needs.”

“On the capital return front, we repurchased 2.4 million shares and paid $13 million in dividends in the first quarter,” continued Jagiela. “For the full year, we remain on track to repurchase at least $300 million of the $500 million Board authorization.”

Teradyne also announced it has entered into a credit agreement for a 5 year, senior secured credit facility of $350 million to be available for general corporate purposes and working capital. Teradyne has not borrowed funds under this facility to date.

Guidance for the second quarter of 2015 is revenue of $470 million to $500 million, with non-GAAP net income of $0.42 to $0.48 per diluted share and GAAP net income of $0.37 to $0.43 per diluted share. Non-GAAP guidance excludes acquired intangible asset amortization and the related tax impact on non-GAAP adjustments.


A conference call to discuss the first quarter results, along with management's business outlook, will follow at 10 a.m. ET, Friday, May 1. Interested investors should access the webcast at www.teradyne.com and click on "Investors" at least five minutes before the call begins. Presentation materials will be available starting at 10 a.m. ET. A replay will be available on the Teradyne website at www.teradyne.com/investors.

Non-GAAP Results

In addition to disclosing results that are determined in accordance with GAAP, Teradyne also discloses non-GAAP results of operations that exclude certain income items and charges. These results are provided as a complement to results provided in accordance with GAAP. Non-GAAP income from operations and non-GAAP net income exclude goodwill impairment charge, acquired intangible asset amortization, retired CEO equity charge, non-cash convertible debt interest, discrete income tax adjustments, pension and post retirement actuarial gains and losses, restructuring and other, and a gain from the sale of an equity investment. GAAP requires that these items be included in determining income from operations and net income. Non-GAAP income from operations, non-GAAP net income, non-GAAP income from operations and non-GAAP net income as a percentage of revenue, and non-GAAP net income per share are non-GAAP 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 measures are used to make operational decisions, to determine employee compensation, to forecast future operational results, and for comparison with Teradyne’s business plan, historical operating results and the operating results of Teradyne’s competitors. Non-GAAP gross margin excludes pension and post retirement actuarial gains and losses. GAAP requires that this item be included in determining gross margin. Non-GAAP gross margin dollar amount and percentage are non-GAAP 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. Prior to September 29, 2014, non-GAAP diluted shares included the impact of Teradyne’s call option and warrant on its shares. Management believes each of these non-GAAP 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 financial 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.

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