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Teradyne (TER) Q2 Earnings & Revenues Top Estimates, Up Y/Y

Teradyne TER reported second-quarter 2021 earnings of $1.91 per share, which surpassed the Zacks Consensus Estimate by 9.8% and increased 44% year over year.

Revenues of $1.09 billion also surpassed the Zacks Consensus Estimate of $1.05 billion. Further, the figure increased 29.76% year over year. Strong performance of Test and Industrial Automation (“IA”) businesses drove top-line growth for the reported quarter.

Teradyne, Inc. Price, Consensus and EPS Surprise

Teradyne, Inc. price-consensus-eps-surprise-chart | Teradyne, Inc. Quote

Quarter Details

Revenues from Semiconductor Test platforms, System Test business, IA and Wireless Test business were $834 million, $105 million, $92 million and $55 million, respectively.

Test demand across all end markets served remained high for the reported quarter. Moreover, system-on-a-chip test shipments grew approximately 30% year over year.

Further, the IA business witnessed strong recovery as IA revenues increased 57% year over year. Also, its Universal Robots delivered growth in North America, Europe and China driven by global economic recovery and expanding range of automation solutions.

Non-GAAP gross margin was 59.6%, expanding 340 basis points (bps) year over year.

GAAP operating expenses increased 1.81% year over year to $258.1 million. As a percentage of revenues, GAAP operating expenses decreased 645 bps year over year to 23.77%.

Selling and administrative (S&A) expenses grew 23.7% year over year to $140.1 million. Engineering and development (E&D) increased 16.9% year over year to $110 million. Nonetheless, S&A and E&D expenses contracted 60 bps and 109 bps as a percentage of revenues, respectively.

Acquired intangible assets amortization (AIAA) and restructuring and other (R&O) expenses declined 39.6% and 93.3% year over year to $5.4 million and $2.5 million, respectively. As a percentage of revenues, AIAA and R&O expenses contracted 57 bps and 421 bps year over year, respectively.

Consequently, non-GAAP operating margin was at 36.5%, which expanded 500 bps from the year-ago quarter.

Balance Sheet & Cash Flow

As of Jul 4, 2021, Teradyne’s cash and cash equivalents (including marketable securities) were $1.24 billion, lower than $1.31 billion on Apr 4, 2021.

Net cash provided by operating activities was $206.3 million for the second quarter versus $38.1 million in the prior quarter.

Guidance

For the third quarter of 2021, Teradyne expects revenues between $880 million and $960 million. The Zacks Consensus Estimate for the same is pegged at $931.1 million.

Continuous demand from both Test and Industrial Automation end markets are major tailwinds.

Non-GAAP earnings are expected between $1.29 and $1.55 per share for third-quarter 2021. The consensus mark for the same is $1.38 per share.

Zacks Rank & Stocks to Consider

Currently, Teradyne carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector include Semtech Corporation SMTC, Agilent Technologies A and Microchip Technology Incorporated MCHP, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth rates for Semtech, Agilent and Microchip are currently projected at 12.5%, 13% and 15.3%, respectively.


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