Teradyne, Inc. Net Income surged on 67.7% and Revenue surged on 36.0%
01/27/2021 • About Teradyne, Inc. (
$TER) • By InTwits
Teradyne, Inc. reported FY2020 financial results today. Here are the key drivers of the company's long term financial model:
- Teradyne, Inc. is a growth stock: FY2020 revenue growth was 36.0%, 5 year revenue CAGR was 13.7% at FY2020 ROIC 40.3%
- EBITDA Margin is quite volatile: 33.8% in FY2020, 30.3% in FY2019, 27.9% in FY2018, 29.6% in FY2017, 3.4% in FY2016
- Teradyne, Inc. has medium CAPEX intensity: 5 year average CAPEX/Revenue was 5.4%. At the same time it's in pair with industry average of 7.6%
- CAPEX is quite volatile: $60m in FY2020, $104m in FY2019, $53m in FY2018, $39m in FY2017, $63m in FY2016
- The company has highly profitable business model: ROIC is 40.3%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue jumped on 36.0%. Revenue growth showed slowdown in FY20Q4 - it was 15.9% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 2.1 pp from -1.0% to 1.0% in FY2020.
Gross Margin decreased slightly on 1.2 pp from 58.4% to 57.2% in FY2020. During FY2016-FY2020 Gross Margin topped in FY2019 at 58.4%. SG&A as a % of Revenue decreased on 4.2 pp from 19.0% to 14.9% in FY2020.
Net Income margin increased on 4.8 pp from 20.4% to 25.1% in FY2020. Net Income margin followed a growing trend at 6.4 pp per annum in the last 5 years.
Investments (CAPEX, working capital and M&A)
Teradyne, Inc.'s CAPEX/Revenue was 5.9% in FY2020. Teradyne, Inc.'s CAPEX/Revenue increased slightly on 0.99 pp from 4.9% in FY2017 to 5.9% in FY2020. Average CAPEX/Revenue for the last three years was 5.7%. CAPEX as a % of Revenue followed a growing trend at 0.31 pp per annum in FY2016-FY2020.
Return on investment
The company operates at high and attractive ROIC (40.3%) and ROE (42.5%). ROIC jumped on 11.1 pp from 29.2% to 40.3% in FY2020. ROE jumped on 11.4 pp from 31.1% to 42.5% in FY2020. ROIC followed a growing trend at 9.2 pp per annum in the last 5 years. ROE stuck to a growing trend at 10.7 pp per annum in the last 5 years.
Leverage (Debt)
Company's Net Debt / EBITDA is -0.4x and Debt / EBITDA is 0.4x. Debt increased on 2.8% while cash jumped on 18.1%.
Teradyne, Inc. has no short term refinancing risk: cash is higher than short term debt (1,695.5%).
Valuation and dividends
Teradyne, Inc.'s trades at EV/EBITDA 20.1x and P/E 27.5x.
Management team
Mark E Jagiela is a the company's CEO. Mark E Jagiela has spent 7 years with the company. The company's CFO Sanjay Mehta has spent 1 year with the company.
Financial and operational results
Teradyne, Inc. ($TER) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 1,753 | 2,137 | 2,101 | 2,295 | 3,121 | 36.0% |
| Gross Profit | 960 | 1,221 | 1,220 | 1,340 | 1,786 | 33.3% |
| SG&A | 316 | 349 | 391 | 437 | 465 | 6.3% |
| EBITDA | 60 | 633 | 587 | 696 | 1,055 | 51.6% |
| EBIT | -60 | 525 | 474 | | | |
| Interest expence | 4 | 22 | 31 | | | |
| Tax | -12 | 267 | 16 | | | |
| Net Income | -43 | 258 | 452 | 467 | 784 | 67.7% |
| Stock Based Compensation | 25 | 34 | 34 | | | |
Balance Sheet
|
|---|
| Cash | 308 | 430 | 927 | 774 | 914 | 18.1% |
| Accounts Receivable | 192 | 273 | 291 | | | |
| Inventory | 136 | 108 | 154 | | | |
| Accounts Payable | 95 | 86 | 101 | | | |
| Short Term Debt | 0 | 0 | 0 | 19 | 54 | 176.8% |
| Long Term Debt | 353 | 366 | 380 | 441 | 419 | -4.9% |
Cash flow
|
|---|
| Capex | 85 | 105 | 114 | 135 | 185 | 37.4% |
| Dividends | 49 | 55 | 67 | | | |
| Acquisitions | | | 169 | | | |
Ratios
|
|---|
| Revenue growth | 6.9% | 21.9% | -1.7% | 9.2% | 36.0% | |
| EBITDA growth | -84.4% | 955.8% | -7.3% | 18.6% | 51.6% | |
|
|---|
| Gross Margin | 54.7% | 57.2% | 58.1% | 58.4% | 57.2% | -1.2% |
| EBITDA Margin | 3.4% | 29.6% | 27.9% | 30.3% | 33.8% | 3.5% |
| EBIT Margin | -3.4% | 24.6% | 22.6% | | |
| SG&A, % of revenue | 18.0% | 16.3% | 18.6% | 19.0% | 14.9% | -4.2% |
| SBC, % of revenue | 1.4% | 1.6% | 1.6% | | |
| Net Income Margin | -2.5% | 12.1% | 21.5% | 20.4% | 25.1% | 4.8% |
| CAPEX, % of revenue | 4.9% | 4.9% | 5.4% | 5.9% | 5.9% | 0.1% |
|
|---|
| ROIC | -2.9% | 23.8% | 22.6% | 29.2% | 40.3% | 11.1% |
| ROE | -2.3% | 13.6% | 26.0% | 31.1% | 42.5% | 11.4% |
| Net Debt/EBITDA | 0.7x | -0.1x | -0.9x | -0.5x | -0.4x | 0.0x |
| Interest expence / Average debt | 1.0% | 6.0% | 8.4% | | | |
People
|
|---|
| Insider ownership | 0.5% | 0.5% | 0.5% | | | |
| Employees | 4,300 | 4,500 | 4,900 | | | |
| Revenue/Employee, th. $ | 408 | 475 | 429 | | | |
Teradyne, Inc. ($TER) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 704 | 839 | 819 | 759 | | 42.6% | 48.7% | 40.8% | 15.9% |
| EBITDA | 239 | 251 | 300 | 266 | | 86.7% | 53.5% | 57.9% | 26.9% |
| Net Income | 176 | 189 | 223 | 196 | | 61.4% | 94.0% | 63.9% | 43.5% |
Balance Sheet
|
|---|
| Cash | 593 | 725 | 945 | 914 | | 22.7% | 46.5% | 59.1% | 18.1% |
| Short Term Debt | 20 | 20 | 20 | 54 | | 14.1% | 10.9% | 10.5% | 176.8% |
| Long Term Debt | 445 | 446 | 448 | 419 | | 5.5% | 2.8% | 2.4% | -4.9% |
Ratios
|
|---|
| Gross Margin | 57.6% | 56.2% | 56.0% | 59.3% | | -0.6% | -1.2% | -3.3% | 0.7% |
| EBITDA Margin | 33.9% | 29.9% | 36.6% | 35.1% | | 8.0% | 0.9% | 4.0% | 3.0% |
| Net Income Margin | 25.0% | 22.5% | 27.2% | 25.9% | | 2.9% | 5.3% | 3.8% | 5.0% |
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 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Xperi Corporation ($XPER) | - | 44.0% | 8.7% | -31.0% | 218.5% |
| DAQO New Energy Corp. ($DQ) | - | 41.1% | -6.7% | 16.0% | 93.0% |
| Advanced Energy Industries, Inc. ($AEIS) | - | 38.7% | 7.1% | 9.7% | 79.5% |
| Ichor Holdings ($ICHR) | - | 61.7% | 25.6% | -24.6% | 47.3% |
| ACM Research, Inc. ($ACMR) | - | 33.4% | 104.5% | 44.1% | 45.7% |
| |
|---|
| Median (27 companies) | 5.0% | 24.7% | 15.5% | -2.8% | 16.3% |
|---|
| Teradyne, Inc. ($TER) | - | 21.9% | -1.7% | 9.2% | 36.0% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Xperi Corporation ($XPER) | 99.8% | 98.3% | 96.7% | 97.0% | 91.2% |
| PDF Solutions, Inc. ($PDFS) | 58.6% | 53.4% | 50.1% | 60.9% | 58.2% |
| Nova Measuring Instruments Ltd. ($NVMI) | 45.9% | 59.1% | 57.8% | 54.2% | 56.8% |
| Kulicke and Soffa Industries, Inc. ($KLIC) | 45.7% | 47.2% | 46.1% | 47.1% | 47.8% |
| Camtek Ltd. ($CAMT) | 41.0% | 48.7% | 49.4% | 48.3% | 47.0% |
| |
|---|
| Median (27 companies) | 37.3% | 43.2% | 40.2% | 40.3% | 42.4% |
|---|
| Teradyne, Inc. ($TER) | 54.7% | 57.2% | 58.1% | 58.4% | 57.2% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Xperi Corporation ($XPER) | 47.6% | 23.4% | 34.3% | 16.4% | 40.8% |
| DAQO New Energy Corp. ($DQ) | 43.3% | 49.1% | 36.1% | 27.1% | 38.0% |
| Cabot Microelectronics Corporation ($CCMP) | 23.4% | 27.2% | 31.5% | 20.1% | 31.6% |
| Entegris, Inc. ($ENTG) | 21.7% | 25.6% | 27.1% | 24.7% | 29.3% |
| Nova Measuring Instruments Ltd. ($NVMI) | 10.2% | 28.8% | 27.1% | 22.1% | 25.9% |
| |
|---|
| Median (25 companies) | 12.1% | 16.0% | 16.2% | 11.9% | 15.4% |
|---|
| Teradyne, Inc. ($TER) | 3.4% | 29.6% | 27.9% | 30.3% | 33.8% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| DAQO New Energy Corp. ($DQ) | 29.5% | 19.8% | 47.4% | 79.7% | 17.5% |
| Photronics, Inc. ($PLAB) | 10.4% | 20.4% | 17.3% | 32.4% | 11.6% |
| Cabot Microelectronics Corporation ($CCMP) | 4.1% | 4.2% | 3.6% | 5.4% | 11.3% |
| Amkor Technology, Inc. ($AMKR) | 16.5% | 13.1% | 12.7% | 11.7% | 10.9% |
| ACM Research, Inc. ($ACMR) | 2.9% | 1.8% | 2.5% | 0.9% | 9.5% |
| |
|---|
| Median (24 companies) | 2.2% | 2.8% | 2.9% | 3.2% | 3.3% |
|---|
| Teradyne, Inc. ($TER) | 4.9% | 4.9% | 5.4% | 5.9% | 5.9% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| DAQO New Energy Corp. ($DQ) | 12.7% | 23.2% | 12.2% | 5.6% | 18.5% |
| Entegris, Inc. ($ENTG) | 10.3% | 14.7% | 15.4% | 11.3% | 16.4% |
| Advanced Energy Industries, Inc. ($AEIS) | 41.2% | 45.7% | 31.3% | 6.9% | 15.5% |
| Ultra Clean Holdings, Inc. ($UCTT) | 7.8% | 27.5% | 10.5% | 4.1% | 14.8% |
| MKS Instruments, Inc. ($MKSI) | 10.1% | 20.3% | 22.7% | 8.3% | 14.1% |
| |
|---|
| Median (27 companies) | 7.6% | 12.2% | 11.2% | 5.5% | 10.2% |
|---|
| Teradyne, Inc. ($TER) | -2.9% | 23.8% | 22.6% | 29.2% | 40.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Veeco Instruments Inc. ($VECO) | - | - | - | 577.2x | 3.4x |
| Cohu, Inc. ($COHU) | -6.0x | -2.7x | - | 10.1x | 2.9x |
| Xperi Corporation ($XPER) | 4.2x | 5.0x | 2.6x | 6.1x | 2.1x |
| Cabot Microelectronics Corporation ($CCMP) | -1.3x | -1.8x | -1.9x | 3.6x | 2.0x |
| Entegris, Inc. ($ENTG) | 0.7x | 0.1x | 1.1x | 1.6x | 1.0x |
| |
|---|
| Median (23 companies) | -1.3x | -0.7x | -1.0x | -0.4x | -0.3x |
|---|
| Teradyne, Inc. ($TER) | 0.7x | -0.1x | -0.9x | -0.5x | -0.4x |
