Teradyne Reports First Quarter 2020 Results

 


                        
GAAP to Non-GAAP Earnings Reconciliation       
                           
(In millions, except per share amounts)   
             Quarter Ended            
     March 29, 2020  % of Net Revenues      December 31, 2019  % of Net Revenues      March 31, 2019  % of Net Revenues    
                                  
Net revenues   $ 704.4                 $ 654.7                 $ 494.1              
                                                     
Gross profit GAAP and non-GAAP $ 405.6       57.6 %           $ 383.2     58.5 %           $ 287.6     58.2 %        
  Inventory step-up   0.1       0.0 %             0.1     0.0 %             -     -          
Gross profit non-GAAP $ 405.7       57.6 %           $ 383.3     58.5 %           $ 287.6     58.2 %        
                                                     
Income from operations - GAAP $ 206.7       29.3 %           $ 171.7     26.2 %           $ 93.1     18.8 %        
  Acquired intangible assets amortization   9.9       1.4 %             9.8     1.5 %             10.6     2.1 %        
  Restructuring and other (1)   (7.6 )     -1.1 %             (2.1 )   -0.3 %             5.1     1.0 %        
  Inventory step-up   0.1       0.0 %             0.1     0.0 %             -     -          
Income from operations - non-GAAP $ 209.1       29.7 %           $ 179.5     27.4 %           $ 108.8     22.0 %        
                                                     
                Net Income per Common Share           Net Income per Common Share           Net Income per Common Share
        March 29, 2020   % of Net Revenues   Basic   Diluted   December 31, 2019   % of Net Revenues   Basic   Diluted   March 31, 2019   % of Net Revenues   Basic   Diluted
Net income - GAAP $ 176.2       25.0 %   $ 1.06     $ 0.97     $ 125.1     19.1 %   $ 0.75     $ 0.69     $ 109.1     22.1 %   $ 0.63     $ 0.62  
  Acquired intangible assets amortization   9.9       1.4 %     0.06       0.05       9.8     1.5 %     0.06       0.05       10.6     2.1 %     0.06       0.06  
  Interest and other (2)   3.5       0.5 %     0.02       0.02       18.5     2.8 %     0.11       0.10       3.4     0.7 %     0.02       0.02  
  Restructuring and other (1)   (7.6 )     -1.1 %     (0.05 )     (0.04 )     (2.1 )   -0.3 %     (0.01 )     (0.01 )     5.1     1.0 %     0.03       0.03  
  Pension mark-to-market adjustment (2)   -       -       -       -       7.7     1.2 %     0.05       0.04       -     -       -       -  
  Inventory step-up   0.1       0.0 %     0.00       0.00       0.1     0.0 %     0.00       0.00       -     -       -       -  
  Exclude discrete tax adjustments (3)   (7.7 )     -1.1 %     (0.05 )     (0.04 )     1.4     0.2 %     0.01       0.01       (30.1 )   -6.1 %     (0.17 )     (0.17 )
  Non-GAAP tax adjustments   (1.9 )     -0.3 %     (0.01 )     (0.01 )     (7.8 )   -1.2 %     (0.05 )     (0.04 )     (3.5 )   -0.7 %     (0.02 )     (0.02 )
  Convertible share adjustment (4)   -       -       -       0.04       -     -       -       0.03       -     -       -       0.01  
Net income - non-GAAP (4) $ 172.5       24.5 %   $ 1.04     $ 1.00     $ 152.7     23.3 %   $ 0.91     $ 0.88     $ 94.6     19.1 %   $ 0.55     $ 0.54  
                                                     
GAAP and non-GAAP weighted average common shares - basic   166.6                   167.3                   173.5              
GAAP weighted average common shares - diluted   180.7                   181.8                   177.0              
  Exclude dilutive shares related to convertible note transaction       (7.3 )                 (7.3 )                 (2.2 )            
Non-GAAP weighted average common shares - diluted   173.4                   174.5                   174.8              
                                                     
                                                     
(1 Restructuring and other consists of:                                              
        Quarter Ended            
        March 29, 2020               December 31, 2019               March 31, 2019            
  Contingent consideration fair value adjustment   $ (10.0 )               $ (2.8 )               $ 3.0              
  Acquisition related expenses and compensation     1.4                   0.2                   1.3              
  Employee severance     0.7                   0.5                   0.8              
  Other       0.3                   -                   -              
        $ (7.6 )               $ (2.1 )               $ 5.1              
                                                     
(2 For the quarters ended March 29, 2020, December 31, 2019, and March 31, 2019, adjustment to exclude non-cash convertible debt interest expense. For the quarter ended December 31, 2019, adjustment to exclude actuarial loss recognized under GAAP in accordance with Teradyne's mark-to-market pension accounting and adjustment to exclude RealWear $15.0 million investment impairment.          
                                                     
(3 For the quarters ended March 29, 2020, December 31, 2019, and March 31, 2019, adjustment to exclude discrete income tax items. For the quarter ended March 31, 2019, income tax (benefit) provision includes a $26 million tax benefit from the release of uncertain tax position reserves due to the IRS completion of its audit of Teradyne's 2015 Federal tax return.          
                                                     
(4 For the quarters ended March 29, 2020 and December 31, 2019, the non-GAAP diluted EPS calculation adds back $1.3 million of convertible debt interest expense to non-GAAP net income and non-GAAP weighted average diluted common shares include 5.5 million and 5.4 million shares, respectively, related to the convertible debt hedge transaction.          
                                                     
GAAP to Non-GAAP Reconciliation of Second Quarter 2020 guidance:      
                                                     
GAAP and non-GAAP second quarter revenue guidance:     $690 million to $800 million                                    
GAAP net income per diluted share     $ 0.76     $ 1.05                                      
  Exclude acquired intangible assets amortization       0.06       0.06                                      
  Exclude non-cash convertible debt interest       0.02       0.02                                      
  Tax effect of non-GAAP adjustments       (0.02 )     (0.02 )                                    
  Convertible share adjustment       0.04       0.05                                      
Non-GAAP net income per diluted share     $ 0.86     $ 1.16                                      
                                                     
For press releases and other information of interest to investors, please visit Teradyne's homepage at: teradyne.com.         
  Contact: Teradyne, Inc.                                              
    Andy Blanchard 978-370-2425                                 
    Vice President of Corporate Relations                                 

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