Teradyne (TER - Free Report) 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.
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 - Free Report) , Agilent Technologies (A - Free Report) and Microchip Technology Incorporated (MCHP - Free Report) , 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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Teradyne (TER - Free Report) 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.
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 - Free Report) , Agilent Technologies (A - Free Report) and Microchip Technology Incorporated (MCHP - Free Report) , 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.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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