TERADYNE, INC. REPORT FOR FOURTH FISCAL QUARTER OF 2022
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||||||
Quarter Ended | Twelve Months Ended | ||||||||||||||||||||||
December 31, 2022 | October 2, 2022 | December 31, 2021 | December 31, 2022 | December 31, 2021 | |||||||||||||||||||
Net revenues | $ | 731,836 | $ | 827,073 | $ | 885,047 | $ | 3,155,045 | $ | 3,702,881 | |||||||||||||
Cost of revenues (exclusive of acquired intangible assets amortization shown separately below) (1) | 311,387 | 341,694 | 357,998 | 1,287,894 | 1,496,225 | ||||||||||||||||||
Gross profit | 420,449 | 485,379 | 527,049 | 1,867,151 | 2,206,656 | ||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Selling and administrative | 142,752 | 135,632 | 142,747 | 558,103 | 547,559 | ||||||||||||||||||
Engineering and development | 108,810 | 111,715 | 109,965 | 440,591 | 427,609 | ||||||||||||||||||
Acquired intangible assets amortization | 4,670 | 4,729 | 5,163 | 19,333 | 21,456 | ||||||||||||||||||
Restructuring and other (2) | (2,369 | ) | 1,796 | 12,738 | 17,185 | 9,312 | |||||||||||||||||
Operating expenses | 253,863 | 253,872 | 270,613 | 1,035,212 | 1,005,936 | ||||||||||||||||||
Income from operations | 166,586 | 231,507 | 256,436 | 831,939 | 1,200,720 | ||||||||||||||||||
Interest and other (income) expense (3) | (28,651 | ) | 5,310 | 1,256 | (8,446 | ) | 39,765 | ||||||||||||||||
Income before income taxes | 195,237 | 226,197 | 255,180 | 840,385 | 1,160,955 | ||||||||||||||||||
Income tax provision | 22,936 | 42,712 | 31,140 | 124,884 | 146,366 | ||||||||||||||||||
Net income | $ | 172,301 | $ | 183,485 | $ | 224,040 | $ | 715,501 | $ | 1,014,589 | |||||||||||||
Net income per common share: | |||||||||||||||||||||||
Basic
| $ | 1.11 | $ | 1.17 | $ | 1.38 | $ | 4.52 | $ | 6.15 | |||||||||||||
Diluted
| $ | 1.04 | $ | 1.10 | $ | 1.26 | $ | 4.22 | $ | 5.53 | |||||||||||||
Weighted average common shares - basic | 155,762 | 156,364 | 162,769 | 158,434 | 164,960 | ||||||||||||||||||
Weighted average common shares - diluted (4) | 165,468 | 166,733 | 178,020 | 169,734 | 183,625 | ||||||||||||||||||
Cash dividend declared per common share | $ | 0.11 | $ | 0.11 | $ | 0.10 | $ | 0.44 | $ | 0.40 | |||||||||||||
(1) | Cost of revenues includes: | Quarter Ended | Twelve Months Ended | ||||||||||||||||||||
December 31, 2022 | October 2, 2022 | December 31, 2021 | December 31, 2022 | December 31, 2021 | |||||||||||||||||||
Provision for excess and obsolete inventory | $ | 11,787 | $ | 12,234 | $ | 3,700 | $ | 31,452 | $ | 15,475 | |||||||||||||
Sale of previously written down inventory | (828 | ) | (269 | ) | (434 | ) | (1,808 | ) | (2,477 | ) | |||||||||||||
$ | 10,959 | $ | 11,965 | $ | 3,266 | $ | 29,644 | $ | 12,998 | ||||||||||||||
(2) | Restructuring and other consists of: | Quarter Ended | Twelve Months Ended | ||||||||||||||||||||
December 31, 2022 | October 2, 2022 | December 31, 2021 | December 31, 2022 | December 31, 2021 | |||||||||||||||||||
Employee severance | $ | 775 | $ | 1,215 | $ | 284 | $ | 2,924 | $ | 1,525 | |||||||||||||
Gain on sale of asset | (3,410 | ) | - | - | (3,410 | ) | - | ||||||||||||||||
Litigation settlement | - | - | 12,000 | 14,700 | 12,000 | ||||||||||||||||||
Contingent consideration fair value adjustment | - | - | - | - | (7,227 | ) | |||||||||||||||||
Other | 266 | 581 | 454 | 2,971 | 3,014 | ||||||||||||||||||
$ | (2,369 | ) | $ | 1,796 | $ | 12,738 | $ | 17,185 | $ | 9,312 | |||||||||||||
(3) | Interest and other includes: | Quarter Ended | Twelve Months Ended | ||||||||||||||||||||
December 31, 2022 | October 2, 2022 | December 31, 2021 | December 31, 2022 | December 31, 2021 | |||||||||||||||||||
Pension actuarial gains | $ | (25,592 | ) | $ | - | $ | (1,590 | ) | $ | (25,584 | ) | $ | (2,217 | ) | |||||||||
Loss on convertible debt conversions | - | - | 3,431 | - | 28,828 | ||||||||||||||||||
Non-cash convertible debt interest | - | - | 1,166 | - | 10,286 | ||||||||||||||||||
$ | (25,592 | ) | $ | - | $ | 3,007 | $ | (25,584 | ) | $ | 36,897 | ||||||||||||
(4) | Under GAAP, when calculating diluted earnings per share, convertible debt must be assumed to have converted if the effect on EPS would be dilutive. Diluted shares assume the conversion of the convertible debt as the effect would be dilutive. Accordingly, for the quarters ended December 31, 2022, October 2, 2022, and December 31, 2021, 1.2 million, 1.5 million and 3.4 million shares, respectively, have been included in diluted shares. For the twelve months ended December 31, 2022 and December 31, 2021, 1.8 million and 7.4 million shares, respectively, have been included in diluted shares. For the quarters ended December 31, 2022, October 2, 2022 and December 31, 2021, diluted shares also included 7.9 million, 8.3 million and 10.5 million shares, respectively, from the convertible note hedge transaction. For the twelve months ended December 31, 2022 and December 31, 2021, diluted shares included 8.8 million and 10.0 million shares, respectively, from the convertible note hedge transaction. | ||||||||||||||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) | |||||||||||||||||||||||
December 31, 2022 | December 31, 2021 | ||||||||||||||||||||||
Assets
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Cash and cash equivalents | $ | 854,773 | $ | 1,122,199 | |||||||||||||||||||
Marketable securities | 39,612 | 244,231 | |||||||||||||||||||||
Accounts receivable, net | 491,145 | 550,749 | |||||||||||||||||||||
Inventories, net | 325,019 | 243,330 | |||||||||||||||||||||
Prepayments | 532,962 | 406,266 | |||||||||||||||||||||
Other current assets | 14,404 | 9,452 | |||||||||||||||||||||
Total current assets | 2,257,915 | 2,576,227 | |||||||||||||||||||||
Property, plant and equipment, net | 418,683 | 387,240 | |||||||||||||||||||||
Operating lease right-of-use assets, net | 73,734 | 68,807 | |||||||||||||||||||||
Marketable securities | 110,777 | 133,858 | |||||||||||||||||||||
Deferred tax assets | 142,784 | 102,428 | |||||||||||||||||||||
Retirement plans assets | 11,761 | 15,110 | |||||||||||||||||||||
Other assets | 28,925 | 24,096 | |||||||||||||||||||||
Acquired intangible assets, net | 53,478 | 75,635 | |||||||||||||||||||||
Goodwill | 403,195 | 426,024 | |||||||||||||||||||||
Total assets | $ | 3,501,252 | $ | 3,809,425 | |||||||||||||||||||
Liabilities
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Accounts payable | $ | 139,722 | $ | 153,133 | |||||||||||||||||||
Accrued employees' compensation and withholdings | 212,266 | 253,667 | |||||||||||||||||||||
Deferred revenue and customer advances | 148,285 | 146,185 | |||||||||||||||||||||
Other accrued liabilities | 112,271 | 124,187 | |||||||||||||||||||||
Operating lease liabilities | 18,594 | 19,977 | |||||||||||||||||||||
Income taxes payable | 65,010 | 88,789 | |||||||||||||||||||||
Current debt | 50,115 | 19,182 | |||||||||||||||||||||
Total current liabilities | 746,263 | 805,120 | |||||||||||||||||||||
Retirement plans liabilities | 116,005 | 151,141 | |||||||||||||||||||||
Long-term deferred revenue and customer advances | 45,131 | 54,921 | |||||||||||||||||||||
Long-term other accrued liabilities | 15,981 | 15,497 | |||||||||||||||||||||
Deferred tax liabilities | 3,267 | 6,327 | |||||||||||||||||||||
Long-term operating lease liabilities | 64,176 | 56,178 | |||||||||||||||||||||
Long-term income taxes payable | 59,135 | 67,041 | |||||||||||||||||||||
Debt
| - | 89,244 | |||||||||||||||||||||
Total liabilities | 1,049,958 | 1,245,469 | |||||||||||||||||||||
Mezzanine equity | - | 1,512 | |||||||||||||||||||||
Shareholders' equity | 2,451,294 | 2,562,444 | |||||||||||||||||||||
Total liabilities, convertible common shares and shareholders’ equity | $ | 3,501,252 | $ | 3,809,425 | |||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) | |||||||||||||||||||||||
Quarter Ended | Twelve Months Ended | ||||||||||||||||||||||
December 31, 2022 | December 31, 2021 | December 31, 2022 | December 31, 2021 | ||||||||||||||||||||
Cash flows from operating activities: | |||||||||||||||||||||||
Net income | $ | 172,301 | $ | 224,040 | $ | 715,501 | $ | 1,014,589 | |||||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||||||||
Depreciation | 22,861 | 23,207 | 90,763 | 91,073 | |||||||||||||||||||
Stock-based compensation | 10,808 | 10,994 | 48,228 | 45,643 | |||||||||||||||||||
Provision for excess and obsolete inventory | 11,787 | 3,700 | 31,452 | 15,475 | |||||||||||||||||||
Amortization | 4,900 | 6,786 | 19,912 | 34,412 | |||||||||||||||||||
Retirement plans actuarial gains | (25,592 | ) | (1,590 | ) | (25,584 | ) | (2,217 | ) | |||||||||||||||
Deferred taxes | (10,320 | ) | (6,573 | ) | (38,693 | ) | (17,305 | ) | |||||||||||||||
Gains on sale of asset | (3,410 | ) | - | (3,410 | ) | - | |||||||||||||||||
(Gains) losses on investments | (1,451 | ) | (1,660 | ) | 9,985 | (6,410 | ) | ||||||||||||||||
Contingent consideration fair value adjustment | - | - | - | (7,227 | ) | ||||||||||||||||||
Loss on convertible debt conversions | - | 3,431 | - | 28,828 | |||||||||||||||||||
Other | 1,621 | 28 | 2,353 | 271 | |||||||||||||||||||
Changes in operating assets and liabilities | |||||||||||||||||||||||
Accounts receivable | 46,380 | 45,521 | 50,628 | (57,778 | ) | ||||||||||||||||||
Inventories | (11,992 | ) | (15,448 | ) | (80,809 | ) | 6,495 | ||||||||||||||||
Prepayments and other assets | (46,382 | ) | (37,282 | ) | (140,713 | ) | (175,846 | ) | |||||||||||||||
Accounts payable and other liabilities | 11,911 | 64,435 | (60,507 | ) | 129,499 | ||||||||||||||||||
Deferred revenue and customer advances | (337 | ) | 1,174 | (6,233 | ) | 9,873 | |||||||||||||||||
Retirement plans contributions | (1,219 | ) | (1,282 | ) | (5,116 | ) | (5,405 | ) | |||||||||||||||
Income taxes | 1,536 | 11,802 | (29,834 | ) | (5,604 | ) | |||||||||||||||||
Net cash provided by operating activities | 183,402 | 331,283 | 577,923 | 1,098,366 | |||||||||||||||||||
Cash flows from investing activities: | |||||||||||||||||||||||
Purchases of property, plant and equipment | (34,577 | ) | (29,310 | ) | (163,249 | ) | (132,472 | ) | |||||||||||||||
Purchases of marketable securities | (20,234 | ) | (152,311 | ) | (287,409 | ) | (661,781 | ) | |||||||||||||||
Proceeds from sales of marketable securities | 8,858 | 57,029 | 268,058 | 266,466 | |||||||||||||||||||
Proceeds from maturities of marketable securities | 40,849 | 88,871 | 222,941 | 660,148 | |||||||||||||||||||
Proceeds from sale of asset | 3,410 | - | 3,410 | - | |||||||||||||||||||
Purchase of investment | - | - | - | (12,000 | ) | ||||||||||||||||||
Net cash (used for) provided by investing activities | (1,694 | ) | (35,721 | ) | 43,751 | 120,361 | |||||||||||||||||
Cash flows from financing activities: | |||||||||||||||||||||||
Dividend payments | (17,133 | ) | (16,266 | ) | (69,711 | ) | (65,977 | ) | |||||||||||||||
Payments of convertible debt principal | (14,754 | ) | (40,993 | ) | (66,759 | ) | (342,990 | ) | |||||||||||||||
Repurchase of common stock | (2,082 | ) | (193,820 | ) | (752,082 | ) | (600,000 | ) | |||||||||||||||
Payments related to net settlement of employee stock compensation awards | (183 | ) | (258 | ) | (33,170 | ) | (32,303 | ) | |||||||||||||||
Issuance of common stock under stock purchase and stock option plans | - | 96 | 28,733 | 32,686 | |||||||||||||||||||
Net cash used for financing activities | (34,152 | ) | (251,241 | ) | (892,989 | ) | (1,008,584 | ) | |||||||||||||||
Effects of exchange rate changes on cash and cash equivalents | (3,529 | ) | (1,576 | ) | 3,889 | (2,065 | ) | ||||||||||||||||
Increase (decrease) in cash and cash equivalents | 144,027 | 42,745 | (267,426 | ) | 208,078 | ||||||||||||||||||
Cash and cash equivalents at beginning of period | 710,746 | 1,079,454 | 1,122,199 | 914,121 | |||||||||||||||||||
Cash and cash equivalents at end of period | $ | 854,773 | $ | 1,122,199 | $ | 854,773 | $ | 1,122,199 | |||||||||||||||
Teradyne Reports Fourth Quarter and Fiscal Year 2022 Results
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