Teradyne, Inc. (TER)

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Teradyne (TER)

Q1 2011 Earnings Call

April 28, 2011 10:00 am ET

Executives

Gregory Beecher - Chief Financial Officer, Principal Accounting officer, Vice President and Treasurer

Michael Bradley - Chief Executive Officer, President and Executive Director

Andrew Blanchard - Vice President of Corporate Relations

Analysts

Atif Malik - Morgan Stanley

James Covello - Goldman Sachs Group Inc.

Mehdi Hosseini - Susquehanna Financial Group, LLLP

Christopher Muse - Barclays Capital

Patrick Ho - Stifel, Nicolaus & Co., Inc.

Krish Sankar - BofA Merrill Lynch

David Duley - Merriman

Timothy Arcuri - Citigroup Inc

Satya Kumar - Crédit Suisse AG

Mahavir Sanghavi - UBS Investment Bank

Presentation

Operator

Good morning, my name is Christy, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q1 2011 Earnings Conference Call. [Operator Instructions] I would now like to hand the podium over to Mr. Andrew Blanchard. Please go ahead.

Andrew Blanchard

Thank you, Christy. Good morning, everyone, and welcome to our discussion of Teradyne's most recent financial results. I'm joined this morning by our Chief Executive Officer, Mike Bradley; and our Chief Financial Officer, Greg Beecher.

Following our opening remarks, we'll provide details of our performance for the first quarter of 2011 as well as our outlook for the second quarter.

First, I'd like to address several administrative issues. The press release containing our most recent financial results was sent out via Business Wire last evening. Copies are available on our website or by calling Teradyne's corporate relations office at (978) 370-2221. This call is being simultaneously webcast at teradyne.com.

Note that during this call, we are providing slides on the website that may be helpful to you in following the discussion. To view them, simply access the Investor page of the site and click on the Live Webcast icon. In addition, replays of this call will be available via the same page about 24 hours after the call ends. The replays will be available, along with the slides, through May 14.

The matters that we discuss today will include forward-looking statements that involve risks factors that could cause Teradyne's results to differ materially from management's current expectations. We encourage you to review the Safe Harbor statement contained in the earnings release as well as our most recent SEC filings for a complete description. Additionally, those forward-looking statements are made as of today, and we take no obligation to update them as a result of developments occurring after this call.

During today's call, we will make reference to non-GAAP financial measures. We have posted additional information concerning these non-GAAP financial measures, including reconciliation to the most directly comparable GAAP financial measure where available on our website. To view them, go to the Investor page and click on the GAAP to non-GAAP reconciliations link.

Also you may want to note that between now and our next conference call, Teradyne will be participating in the Credit Suisse First Boston Semicap Equipment Conference in Boston on May 11; the Bank of America Merrill Lynch Technology Conference on June 1; and the Cowen and Company TMT Conference on June 2, both in New York.

Also please note that we've removed Diagnostic Solutions from the various lines in our P&L as this business unit was sold to SBX for $41 million in the first quarter. Consequently, we've reported its revenue and expenses, all net, in one line as a discontinued operation, and our comments and comparisons hereafter will exclude its results.

Now let's get on with the rest of the agenda. First, our CEO, Mike Bradley, will review the state of the company in the industry in the first quarter and will review our outlook for the second quarter. Then, our CFO, Greg Beecher, will provide more detail on our quarterly performance, along with our guidance for the second quarter. We will then answer your questions. For scheduling purposes, you should note that we intend to end this call after one hour. Mike?

Michael Bradley

Thanks, Andy. Good morning, everyone, and thanks for joining us today. When we were together last quarter, we had wrapped up a very good year, and we're seeing strengthening demand in our SemiTest bookings after a one-quarter correction. That momentum has continued as we posted a $100 million increase in bookings in this first quarter with roughly $75 million from SemiTest and about $25 million from our System Test group. I'll get into some details behind those increases in a minute.

But the summary is that despite some macroeconomic headwinds and despite the tragedy and disruption in Japan, our customers are adding capacity across virtually all of our product lines. Now most of what we'll talk about today will sound familiar to you, reflecting the steady course of our strategy these last couple of years. That includes the focus on testing the silicon in high-growth consumer products, a steady hand on fixed costs and an emphasis on new products and new markets like Hard Disk Drive test.

I should also note upfront that despite the terrible human toll in Japan, our operations there were not severely impacted. So the 200 or so people we have there have been fully engaged with our customers through this very difficult period. Of the 109 customer test facilities that we serve in Japan with about 1,700 testers installed, essentially all have returned to full operating status. Now obviously, we don't know whether any secondary effects will impact our customers in Japan or others outside the region, but we're not altering our shipment plans in anticipation of any additional interruptions.

Read the rest of this transcript for free on seekingalpha.com