Teradyne, Inc. Net Income jumped on 75.3% while EBITDA Margin decreased slightly on 1.7 pp from 29.6% to 27.9%
01/23/2019 • About Teradyne, Inc. (
$TER) • By InTwits
Teradyne, Inc. reported 2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 27.9% in 2018, 29.6% in 2017, 3.4% in 2016, 23.4% in 2015, 15.1% in 2014
- Teradyne, Inc. has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.2%. At the same time it's in pair with industry average of 8.7%
- CAPEX is quite volatile: $38m in 2018, $30m in 2017, $29m in 2016, $18m in 2015, $16m in 2014
- The company has highly profitable business model: ROIC is 22.6%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Teradyne, Inc.'s Revenue decreased slightly on 1.7%. Annual revenue decline showed slowdown in 18Q4 - revenue increased on 8.4%. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased slightly on 1.7 pp from 29.6% to 27.9% in 2018.
Gross Margin increased slightly on 0.92 pp from 57.2% to 58.1% in 2018. Gross Margin grew at 1.1 pp per annum in the last 5 years. SG&A as a % of Revenue increased on 2.3 pp from 16.3% to 18.6% in 2018. During the last 5 years SG&A as a % of Revenue bottomed in 2017 at 16.3%. Stock Based Compensation (SBC) as a % of Revenue showed almost no change in 2018. During the last 5 years SBC as a % of Revenue bottomed in 2016 at 1.4% and was growing since that time.
Net Income margin increased on 9.4 pp from 12.1% to 21.5% in 2018. The efficient tax rate was 3.4% in 2018.
Investments (CAPEX, working capital and M&A)
Teradyne, Inc.'s CAPEX/Revenue was 5.4% in 2018. The company showed almost no change in CAPEX/Revenue from 2015 to 2018. Average CAPEX/Revenue for the last three years was 5.1%. During the last 5 years CAPEX as a % of Revenue bottomed in 2016 at 4.9% and was growing since that time.
Accounts receivable as a % of Revenue increased slightly on 1.1 pp from 12.8% to 13.9% in 2018. Inventories as a % of Revenue increased on 2.3 pp from 5.0% to 7.3% in 2018. Accounts payable as a % of Revenue increased slightly on 2.0 pp from 9.4% to 11.4% in 2018.
Teradyne, Inc. has spent
$169m on M&A in 2018 which accounts for 8.1% of revenue.
Return on investment
The company operates at high and attractive ROIC (22.6%) and ROE (26.0%). ROIC decreased slightly on 1.2 pp from 23.8% to 22.6% in 2018. ROE surged on 12.4 pp from 13.6% to 26.0% in 2018.
Leverage (Debt)
Company's Net Debt / EBITDA is -0.9x and Debt / EBITDA is 0.6x. Debt increased on 3.8% while cash surged on 116%.
Teradyne, Inc. has good short term financial stability: Interest coverage ratio (ICR) is 15.2x. The company has no short term refinancing risk: short term debt is zero.
Average interest expence paid by the company was 8.2% in 2018.
Valuation and dividends
Teradyne, Inc.'s trades at EV/EBITDA 10.3x and P/E 14.6x.
The company paid 14.8% of Net Income as dividends in 2018. Dividends grew on average at 12.6% per annum in the last 5 years).
Management team
Mark E Jagiela is a Teradyne, Inc.'s CEO. Mark E Jagiela is a founder and has spent 3 years with the company. CEO total compensation was
$7,172,691 in 2018 which included
$904,720 salary and
$325,588 annual bonus.
At the end of financial year the company had 0.54% shares owned by insiders. Insider ownership didn't change in 2018.
At the end of financial year the company had 4,900 employees. The number of employees increased on 8.9%. Average revenue per employee in 2018 was
$428,735 and it decreased on 9.7%.
Financial and operational results
FY ended 12/31/2018
Teradyne, Inc. ($TER) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 1,648 | 1,640 | 1,753 | 2,137 | 2,101 | -1.7% |
| Gross Profit | 879 | 916 | 960 | 1,221 | 1,220 | -0.1% |
| SG&A | 320 | 306 | 316 | 349 | 391 | 12.0% |
| EBITDA | 249 | 384 | 60 | 633 | 587 | -7.3% |
| EBIT | 96 | 243 | -60 | 525 | 474 | -9.8% |
| Interest expence | 7 | 2 | 4 | 22 | 31 | 44.3% |
| Tax | 14 | 47 | -12 | 267 | 16 | -94.0% |
| Net Income | 81 | 206 | -43 | 258 | 452 | 75.3% |
| Stock Based Compensation | 40 | 26 | 25 | 34 | 34 | -1.5% |
Balance Sheet
|
|---|
| Cash | 294 | 265 | 308 | 430 | 927 | 115.6% |
| Accounts Receivable | 151 | 211 | 192 | 273 | 291 | 6.8% |
| Inventory | 105 | 154 | 136 | 108 | 154 | 42.8% |
| Accounts Payable | 48 | 92 | 95 | 86 | 101 | 16.5% |
| Short Term Debt | 0 | 0 | 0 | 0 | 0 | |
| Long Term Debt | 0 | 0 | 353 | 366 | 380 | 3.8% |
Cash flow
|
|---|
| Capex | 169 | 90 | 85 | 105 | 114 | 8.5% |
| Dividends | 37 | 51 | 49 | 55 | 67 | 21.8% |
| Acquisitions | 19 | 283 | | | 169 | |
Ratios
|
|---|
| Revenue growth | 15.4% | -0.5% | 6.9% | 21.9% | -1.7% | |
| EBITDA growth | -27.1% | 54.1% | -84.4% | 955.8% | -7.3% | |
|
|---|
| Gross Margin | 53.3% | 55.8% | 54.7% | 57.2% | 58.1% | 0.9% |
| EBITDA Margin | 15.1% | 23.4% | 3.4% | 29.6% | 27.9% | -1.7% |
| EBIT Margin | 5.9% | 14.8% | -3.4% | 24.6% | 22.6% | -2.0% |
| SG&A, % of revenue | 19.4% | 18.7% | 18.0% | 16.3% | 18.6% | 2.3% |
| SBC, % of revenue | 2.4% | 1.6% | 1.4% | 1.6% | 1.6% | 0.0% |
| Net Income Margin | 4.9% | 12.6% | -2.5% | 12.1% | 21.5% | 9.4% |
| CAPEX, % of revenue | 10.3% | 5.5% | 4.9% | 4.9% | 5.4% | 0.5% |
|
|---|
| ROIC | 4.4% | 11.8% | -2.9% | 23.8% | 22.6% | -1.2% |
| ROE | 4.0% | 10.2% | -2.3% | 13.6% | 26.0% | 12.4% |
| Net Debt/EBITDA | -1.2x | -0.7x | 0.7x | -0.1x | -0.9x | -0.8x |
| Interest expence / Average debt | | | 2.1% | 6.0% | 8.2% | 2.2% |
People
|
|---|
| Insider ownership | 0.5% | 0.5% | 0.5% | 0.5% | 0.5% | 0.0% |
| Employees | 3,900 | 4,100 | 4,300 | 4,500 | 4,900 | 8.9% |
| Revenue/Employee, th. $ | 423 | 400 | 408 | 475 | 429 | -9.7% |
Teradyne, Inc. ($TER) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 487 | 527 | 567 | 520 | | 6.7% | -24.4% | 12.6% | 8.4% |
| EBITDA | 123 | 148 | 173 | 143 | | 1.7% | -37.1% | 11.1% | 17.8% |
| Net Income | 87 | 101 | 120 | 144 | | 2.1% | -42.3% | 16.0% | |
Balance Sheet
|
|---|
| Cash | 638 | 480 | 814 | 927 | | 96.4% | -19.7% | 94.4% | 115.6% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | | |
| Long Term Debt | 369 | 373 | 376 | 380 | | 3.8% | 3.8% | 3.8% | 3.8% |
Ratios
|
|---|
| Gross Margin | 55.4% | 58.3% | 58.9% | 59.6% | | -2.6% | 2.3% | 0.3% | 3.1% |
| EBITDA Margin | 25.2% | 28.1% | 30.5% | 27.5% | | -1.2% | -5.7% | -0.4% | 2.2% |
| Net Income Margin | 17.8% | 19.2% | 21.2% | 27.7% | | -0.8% | -5.9% | 0.6% | 49.8% |
Peers in Semiconductor Equipment
Below we provide Teradyne, Inc. benchmarking against other companies in Semiconductor Equipment industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Atomera Incorporated ($ATOM) | | | | | 123.6% |
| ACM Research, Inc. ($ACMR) | | | -12.3% | 33.4% | 104.5% |
| SCI Engineered Materials Inc ($SCIA) | | -13.0% | -32.1% | 24.4% | 67.0% |
| Aehr Test Systems ($AEHR) | | -49.1% | 44.7% | 30.3% | 56.4% |
| SolarEdge Technologies, Inc. ($SEDG) | | 144.0% | 50.7% | 23.9% | 54.4% |
| |
|---|
| Median (37 companies) | | -2.0% | 7.4% | 24.7% | 15.5% |
|---|
| Teradyne, Inc. ($TER) | | -0.5% | 6.9% | 21.9% | -1.7% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Xperi Corporation ($XPER) | 99.5% | 99.8% | 99.8% | 98.3% | 96.7% |
| KLA-Tencor Corporation ($KLAC) | 57.9% | 56.8% | 61.0% | 63.0% | 64.1% |
| Nova Measuring Instruments Ltd. ($NVMI) | 52.7% | 51.9% | 45.9% | 59.1% | 57.8% |
| Nanometrics Incorporated ($NANO) | 47.2% | 47.9% | 51.6% | 52.9% | 56.7% |
| Rudolph Technologies, Inc. ($RTEC) | 52.7% | 53.9% | 53.1% | 52.8% | 54.2% |
| |
|---|
| Median (38 companies) | 34.4% | 38.3% | 37.3% | 43.2% | 40.2% |
|---|
| Teradyne, Inc. ($TER) | 53.3% | 55.8% | 54.7% | 57.2% | 58.1% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| KLA-Tencor Corporation ($KLAC) | 29.2% | 26.4% | 34.4% | 38.3% | 39.6% |
| DAQO New Energy Corp. ($DQ) | 32.9% | 31.6% | 43.3% | 49.1% | 36.1% |
| Xperi Corporation ($XPER) | 66.7% | 67.5% | 47.6% | 23.4% | 34.3% |
| Lam Research Corporation ($LRCX) | 21.1% | 20.3% | 23.2% | 27.6% | 32.0% |
| Cabot Microelectronics Corporation ($CCMP) | 21.6% | 22.6% | 23.4% | 27.2% | 31.5% |
| |
|---|
| Median (37 companies) | 6.8% | 9.8% | 12.1% | 16.0% | 16.2% |
|---|
| Teradyne, Inc. ($TER) | 15.1% | 23.4% | 3.4% | 29.6% | 27.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Rubicon Technology, Inc. ($RBCN) | 15.0% | 4.0% | 3.6% | 0.0% | 58.8% |
| DAQO New Energy Corp. ($DQ) | 42.2% | 44.7% | 29.5% | 19.8% | 47.4% |
| AXT Inc ($AXTI) | 2.4% | 5.4% | 3.4% | 21.6% | 39.6% |
| STR Holdings Inc ($STRI) | 7.9% | 8.1% | 1.6% | 9.0% | 36.6% |
| Photronics, Inc. ($PLAB) | 20.0% | 19.8% | 10.4% | 20.4% | 17.3% |
| |
|---|
| Median (37 companies) | 2.2% | 2.7% | 2.2% | 2.8% | 2.9% |
|---|
| Teradyne, Inc. ($TER) | 10.3% | 5.5% | 4.9% | 4.9% | 5.4% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| KLA-Tencor Corporation ($KLAC) | 17.9% | 16.5% | 27.2% | 34.0% | 39.9% |
| Lam Research Corporation ($LRCX) | 10.7% | 10.9% | 11.8% | 18.7% | 33.9% |
| Versum Materials, Inc. ($VSM) | | 26.2% | 32.4% | 30.0% | 32.1% |
| Advanced Energy Industries, Inc. ($AEIS) | 8.8% | 30.2% | 41.2% | 45.7% | 31.3% |
| SolarEdge Technologies, Inc. ($SEDG) | -815.6% | 33.6% | 31.2% | 26.5% | 28.6% |
| |
|---|
| Median (39 companies) | 3.4% | 5.2% | 7.6% | 12.2% | 11.2% |
|---|
| Teradyne, Inc. ($TER) | 4.4% | 11.8% | -2.9% | 23.8% | 22.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Xperi Corporation ($XPER) | -0.3x | -0.1x | 4.2x | 5.0x | 2.6x |
| Ultra Clean Holdings, Inc. ($UCTT) | -1.2x | 1.5x | 0.4x | -0.2x | 2.4x |
| Ichor Holdings ($ICHR) | 3.1x | 1.7x | -0.4x | 2.0x | 1.8x |
| Versum Materials, Inc. ($VSM) | -0.2x | -0.1x | 2.7x | 2.1x | 1.4x |
| DAQO New Energy Corp. ($DQ) | 4.6x | 4.3x | 2.3x | 0.9x | 1.2x |
| |
|---|
| Median (31 companies) | -1.2x | -1.3x | -1.3x | -0.7x | -1.0x |
|---|
| Teradyne, Inc. ($TER) | -1.2x | -0.7x | 0.7x | -0.1x | -0.9x |
