TER - Earnings call transcript Q3 2019

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Operator

Ladies and gentlemen, my name is Simon, and I will be your conference operator today. At this time, I would like to welcome everyone to the Teradyne Third Quarter 2019 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Thank you.

begin may you Blanchard, your conference. Andy

Andy Blanchard

our Simon. discussion of you, this by Jagiela; Good results. morning, our to morning and Mark CEO, welcome and our Sanjay Teradyne’s joined Mehta. everyone, I’m Thank CFO, most financial recent

provide opening for issued performance outlook for of our our was quarter fourth evening. of quarter Following press details with third release results third containing along our last we’ll remarks, our the XXXX XXXX. The quarter

may available that helpful Investor of the page same of when providing the to page We’re on following website you slides the this the call via after be discussion. Replays ends. will call be the

management’s today the release risk matters could recent to as contained cause Harbor we discuss statements from encourage SEC most filings. forward-looking results statement earnings factors expectations. to you will current The Safe in We review that well involve that the Teradyne’s our that materially as include differ

are obligation call. and statements after today this made of them forward-looking of occurring result update those a to Additionally, developments as no take we as

hosted today’s the conferences measures. information call, financial UBS. to Baird, our Cowen, Teradyne, additional Suisse were GAAP posted financial directly participating the non-GAAP these on earnings page of investor most in Also, we’ll by Investor website. between call, available now non-GAAP the and We including concerning make measures measure financial comparable our next reconciliation During to reference and will Credit be

of with the rest on get the let’s Now, agenda.

along Mark? guidance And is market the as quarter. will details then for Sanjay this Mark We’ll quarterly on more will our fourth questions. with one the scheduled your for First, we then enter and our on hour. call quarter. results results, conditions comment fourth answer recent offer the our

Mark Jagiela

thanks for Thanks, Andy. us. joining morning, everyone, Good and

will purchase third AutoGuide, the Industrial recent for our at fits then details into looking our beyond. to quarter In topics, the our remarks, and and from level; unit next quarter. the our cover provide three Company fourth quarter; agreement mobile at of we’re year Sanjay how view guidance robot financial autonomous business I’ll of the the highlights my and opportunity; prepared how and strategy; Automation the test XG maker,

above results all third on businesses. our across continued of test strength delivered We guidance our quarter

mobile also quarter. MiR in robot well performed Our business the

flat at Universal activity impact were as Robots the sales However, strong were in roughly softening headwind. year-on-year, and manufacturing of a U.S. Europe

X% Overall, from EPS up XXXX up non-GAAP our is revenue year-to-date XX%. and is

growth For a the single-digit expect strong demand combined fourth year-over-year test quarter, in to on we continue, basis. IA with

RF $X.X XXXX of infrastructure business to test demand size unit compared strength At estimate the Semi and remained estimate Test to related for SOC last broadband strong. level, the That very XG driving for and $X.X our in billion above devices $X billion Test to level infrastructure is billion. up digital, our to handset-related SOC demand of with earlier billion year’s a $X market billion $X range, to combined

complexity and Geographically, XG up million China’s unit This combination handsets demand. of SOC tooling fueling base infrastructure down. the market are of station likely and as while device strong reflects be Test world’s market the be rest $XXX for will the year-on-year, growth will

of describing XG drives learning seconds that test in yet growth of and test front, product process architecture driving chip emerging an test up billions devices. associated complexity another we with architectures example networks. vast markets. to flagship the introduced new The require our performance drives rapidly extends the operate UltraFLEXplus. machine have a early die, in and transistors the On and growing of these the product, Multi-core data for UltraFLEX of September, extension the and of class is our plus AI This efficiently that data to comprehensively we streams an devices our complexity which are per big parallel been

with architecture to product test family for an customers first play it the experience this leverage next complexity use compatibility software time, At accumulated in the puts in revenue now are in engineers. our over we maintains multiple the the and at of software QX. recognized UltraFLEXplus growth headroom same test trained customer Systems flex decade. to The XX,XXX from

In Memory strong Test, package flash QX, remained test. wafer driven by demand both and in DRAM

product Although DRAM. will Test flash package up the low and year. wafer this now the Test strong our both entire flash year down on around market test XX% Memory level Magnum be and about family from the covers test, Building $XXX market in year our market, be package foundation to last our this Memory for to likely will about XX% XX% million, share

were test LitePoint’s and a in LitePoint to third and compared ago and quarter sales products System storage connectivity test results, revenues our the more year the standout, shipments. Advanced buying on and while level XX% quarter powered early as XXXX. Test, than respectively of the doubled second terabyte class demand with were flat XX% and HDD from system the about System Test standards XG-related group up quarter

Shifting hand to running end-market, geographic in quarter. were and other largest as demand markets, our supply chain, this automotive on year-over-year in gains segment. remained healthy a and sales MiR was Universal our Japan Robots balanced our with of to and by third Europe China XX% the growth Automation the sales at strong the XXXX demand quarter in XX%, largest quarter with weak. in year-over-year Industrial continued America XX% of Conversely, flat posting grow and clip, the respectively. North

phenomenon, lower the industrial short-term America. We at in North consistent a activity the growth UR with Europe and of slowing is year-to-date believe

output, general. we better decline While faring market our automation solutions in immune in the are than the are not industrial to

underserved and and and we’ll to opportunity expand U.S. investing verticals be to coverage in in our market offset the also these support Europe these see regions. geographies to headwinds We

URXXe, capacity by product product continue we payload new which addition, the offerings. we the In the opens In to up introduced applications expand extending of our line. September,

new vision customers. and also Energid’s unique applications XD picking open robot, industrial quarter, bin We ease shipped to new first software UR in utilizing path at the our planning deployment and application a

the our has MiR plug passed strategy UR+ MirGo. our deploy of certified also applications similar easy and peripherals deployment expanding consistent introduced peripherals, programs XXX-product to short a the customers. play also of low-risk ROI. threshold range safe, with by of cobot strategy for and play plug time Both making shop technicians called and and reducing automation UR are for level with

capabilities forklifts effective prime the warehouse for enabled of solutions. autonomous With The maker expanding robots include our a for we week automation, autonomous are this material driven for moving. payload as technological industrial to global earlier announcement pallet mobile is acquire AutoGuide, and our plan cost material high manually and have of to handling, advancements market

of and software operation as moving technologies to use many the same tugging AutoGuide’s to MiR payload guidance, sensing, pallet applications. products higher and drive autonomous provide

offers flexibilities in or with customers dedicated reduced architecture AG’s Additionally tugger unique either and safer costs forklift greater a operation. modular

fast-growing Like our nascent differentiated other but market. in IA investments, and player AutoGuide a a is small

than expect sales We to material MiR, to of million full-year this customers. year. global broad our low engineering, natural more to and are distribution expect to and double and $XX with there robots be handling Furthermore, now and autonomous lineup attractive we over marketing synergies high-payload

to our as strong Finally, see note. from a on very can guidance, finish we expect XXXX you

the test less Industrial described we’ve visibility in business a is Automation, or than our so; past, quarter. As and in in a quarter the

consistent architected expect cost Teradyne’s in with in are earnings our volatility line volatility we growth our also this model. business While mid-term and we expect mind. markets, in with plans planned structure and overall growth growth trend

overall Test, Test Semi In device an another seen year, strong market. SOC has despite soft semiconductor

has and station testing automotive, As devices handset China linear in I more than in outset, elsewhere test. in decline MCU for this the and smartphone the noted at base year’s offset the strength world

look digesting, have or recover adopt XXXX station base will meaningful continue frankly, millimeter it energy health markets will further the to for the our industrial and a all predict and memory XXXX implications phones questions the are too automotive with we trying XG to affect business spend ramp, wave plans. stabilize this don’t of XXXX, predict. or to really on for our in much aggressive XG there hard these All station will improve, the will doesn’t levels As pause be And base volumes, business aggressive the will of XG contract? we as and

pervasiveness Our the on effective trend test to to drive will business. cost semiconductors a believe yet of that others and inflection like technologies powerful point, new, Similarly, markets, decades we’ve are Industrial our strategy XD in in fundamental Automation we where complexity growth LiDAR, AI opened growth for and the come. the continue drive plans new continue vision, grow reached based to opportunity belief and have line will on and and

test bring for block and stable will a businesses our IA long-term lineup, through of of XXXX technically and growth our AutoGuide IA position flow and that product strengthened building year, but We position, new financial in steady advanced are we of competitive We to automation products and the adds another know exciting our the what tools. don’t differentiated confident positions strategy terms test and well us in our success. demand, with

turn over that, details. With things Sanjay for to I’ll financial

Sanjay Mehta

Thanks, Mark. And everyone. good morning,

of the a acquisition. I’ll we’re of comment on results quarter full-year mobility of detail test AutoGuide on how performance long-term at results provide Today, looking the midpoint insight provide driver and guidance, additional each and business, third the as QX review at the our some business, then on the

Lastly, some early modeling for XXXX. information financial I’ll offer

results third the to our quarter. Now, for

to high our due end Semi business of partially revenue guidance, above sorry, quarter due our by Third Test strengthen revenues. a strength Industrial Automation in was the lower -- $XXX businesses, test offset million of to the

lower Semi XX% guidance, the improved EPS to quarter. third were driven QX mix by of and of by plan. in quarter relative mix of customer margin higher and XX% high the spending had Test. above favorable XX% the sales non-GAAP with of than greater of slightly the product Non-GAAP operating We end revenues was in product margin one driven Gross $X.XX

$XXX Test, Industrial lower and spending second project non-GAAP seasonally see by higher to offset $X on variable million, spending profits. accruals lower million our were in slightly quarter in Semi from operating You’ll compensation higher expenses due down the Automation

to prior Semi XX% QX. and grew DRAM Turning revenue businesses. final $XX individual over Memory quarter, by the driven grew revenue million test of million $XXX of flash Test Test Notably, demand. wafer X% the over

an in two stage. over down transition the investors the met trend. last year-over-year questions of and are is primary demand I’ve asked volumes the in see months, revolves in this of around common I several where environment XG one the strength infancy its drivers handset to the test As surprising

First, technology of few devices premium at higher power getting more and performance of complexity. on Innovations $XXX. continues tier to greater per are increase increased gets This one drives increase technology high key each process lower devices. devices device. test tier camera the fall and as tier in complexity mid more Hence, device than at complexity capability, are high water technologies a device need such water of the or continuous sensors two mid-tier from enters phone then premium for examples leading to This at a complex. low-tier down years for fall requirements tier more to Typically nodes memory compute introduced time to down the devices. and the and devices the of

people a in or at purchase historically low, some to typically Second, the the who TAM. smartphone, next two upgrade up. increase smartphone mid drivers point the These market, high-tier test tier

we not expect So, business. positive to be of Test volatility, without while the mobility driver a multiyear market our is Semi it do

on QX continued of group strong $XX Moving System The revenue results to with Test. to deliver million. in

aerospace defense and grew was increased board buying. quarter-over-quarter the group, slightly defense-related on Test Production System and grew ahead plan. of test Within sequentially

Test we basis, than in delivered and test As XX% from growth terabyte year-over-year Mark the growth drives System in third benefiting storage in more quarter, storage. cloud noted, doubling, a while on

grew aerospace and branches XX% within many projects the Defense seeing we in growth are continued of year-over-year, military. as long-term

last track from For million XX% the to full-year, grow is on of System year’s revenue. Test over $XXX

the momentum standards At saw Wi-Fi with the LitePoint, on early new million buying development of we XG and strength $XX test. of continued sales

$XXX LitePoint will full-year last from year. the XX% For million grow about

of about Automation, million sales from year-over-year. down from down IA, million, revenue UR was up Within $XX QX year-over-year. was were and quarter-over-quarter, million MiR and $XX year-over-year. of flat Industrial revenue, XX% and In QX up slightly X% decline $XX X% a

growth this global a investments, slower year the slowdown North view and so primarily we as a long-term in in noted, IA not America, of a Europe in result far attractor. Mark As market and especially industrial

to continue fully to capability have us. order in of the ahead opportunity to we recognize also organizational we our improve capture However,

capabilities. to will We to those invest strengthen continue

profit Turning AutoGuide. to an $XX up The purchase achieved an revenue through was with million the and if of $XXX to earnout upfront price incremental of million are acquisition certain targets XXXX.

up to in the post in XXXX, AutoGuide close million this quarter, to from later of track standalone basis We expect over revenue regulatory on is a transaction million approvals. $X XXXX. on $XX achieve

XXXX. in serve the distribution XXX% over to broaden global grow North sales to to customers. Their today with in AutoGuide America expect We are their primarily plan

on to in share an be them incur acquisition accretive about basis this will in slightly loss an EPS XXXX basis and EPS this we year be be will We and to positive XXXX. EBITDA a forecast in small buybacks, Relative XXXX. expect neutral on in

standalone between enable scale businesses. Partnership within of operate business our taking Industrial UR, will coupled effectively external their AutoGuide, and them business now across MiR, reporting the Energid efficiently and as advantage experts all and a will AutoGuide competencies of segment. core relationships, to Automation technologies, processes, central Teradyne’s with

this We along acquisition productive. with As user growth this differentiates strategy. make that enabling approach stated flexible, and companies, technologies AutoGuide location. software. is compelling modular, strategy have them in and another acquire of short efficiently robots workplace Automation with at ROIs serving from economics and is customer’s example prior a nascent on calls, management our for to Teradyne scalable Industrial safer with intuitive AutoGuide more be architecture the executing to leading has fleet the their solutions competition autonomous implemented believe mobile purpose-built markets

a have the with the sense so reach targets. of along revenue schedule provided earnouts, required summarizes a performance you slide to the of growth in earnings the We’ve deck, transaction the which the

Additional in information. AutoGuide the deck details are supplemental included

total generated operating results. cash in Back flow in million ended in the an $XXX the and million at continues third shares million at and deliver This $XX $XXX free We in our model strong of with level, quarter cash $X,XXX $XX.XX. quarter, repurchase to the purchase average share brings year-to-date price the Company $XXX in quarter. repurchased to marketable we We the quarter. securities. We paid third dividends of million in the million

to expect we full-year, $XXX shares. million the of For repurchase our

year earnings we’ll usual, our As the call. January plan for update capital in allocation next

will come in memory continued year, XXX million, drive quarter. fourth growth and this lower diluted a $XXX business $XXX businesses. from our Turning Automation expected $X.XX Industrial both, the Test EPS in to $X.XX Semi our a range million guidance our but will and for is seasonably Historically, non-GAAP has shares. million to been test QX infrastructure QX, be and to growth. strength Revenue to of XG on

the profit forecasted is debt XX% of quarter amortization run excludes intangibles OpEx guidance The convertible of our margin acquired run to fourth quarter XX% Fourth XX% revenue. of should The non-cash XX% interest. XX% approximately and gross to operating of should be and revenue. guidance from to

diluted on A shares. a quick and is with requirement the to measure GAAP EPS There comment disclose most dilutive calculation.

of debt expense dilutive debt the to concept treatment QX non-GAAP to QX more the and share EPS associated versus include results the this include perspective than applied EPS have shares an to related assume It’s include the current Diluted convertible and We with respect shares levels. convertible debt. converted to in guidance at shares. our higher price the are interest QX from to the and the not both has

to Shifting taxes.

be tax rate expected full-year XX.X%. to non-GAAP Our is

operating rate Industrial tax a XXXX, sales XX% expect years, the non-GAAP profit a down QX of at with XX%. a sales past Automation year the versus per quarter. to period, grow last you we full-year non-GAAP QX year. from Over in as averaged guidance, be should to share to XX% perspective, earnings non-GAAP this EPS the fourth modeling of be growth seasonally Related expect perspective, We our we sixth longer-term X% From XX%. expect From to this consecutive and in CAGR of XXXX. midpoint is of

investments Semi continue past businesses. a delivering enjoyed In Test that XG we wave infrastructure in quarters strong three of over QX. summary, will results test of In very all our the across are particular, has

demand. drive the test lumpy expect we rollout to global However, XG

Mark demand to we rapid have been XXXX As be to industrial much but AutoGuide’s is by operating well-positioned into potential growth global growth. levels visibility to tuned our handle of test and spending back any has portfolio bolstered don’t Automation volatility. model Industrial described, consistent when will get further recovers The

to strengthen necessary actions position. take investing incremental to and demand continuing We’re drive our to

to I’ll turn back things that, Andy. With

Andy Blanchard

follow-up. take now reminder, as Sanjay. and we’d Thanks, some a one Simon, questions. to yourself question to a limit like And please

Operator

of question comes your Instructions] Bank America. from the first Arya [Operator with And of line Vivek

Your line open. is

Vivek Arya

for suffered normalizes if utilization testers congratulations I’m I’m the last versus semiconductor is understand what customers, Mark, XXXX is your sensitive China this the now? Chinese we are my I seeing, visibility the companies question, time how pull-ins by year. on strong have bought right China you this But, demand of had what that is at from year? low. the sense you and so outlook Thank some taking far of this because of year results. curious your number of curious, do

Mark Jagiela

Yes.

Utilization comments. China. very into as of of we described have still fleet we installed is strength the couple and And a in of high. shipments QX, So, existing testers continued

So, up is the this in through remarks my the pull for geography the is for one unabated. world rest strong where that down. I mentioned China is also and that’s the of demand QX year test

but back and see this somewhat line throughout looking pick been forecasts of trend has frankly, is intact, that half infrastructure the So, long heavy, that be there been well been is And wouldn’t little think, our that this stronger. can year. And, for a of the that But is heavy pause in infrastructure and adding that the at I it as into they’re year been a still what’s investment weak by continued. from test rate question the a the and long-term as some it’s have of in tooling up -- results, next year, could key XG we’ve been the normal? should surprised there’s year. capacity how the view The you bit we’ve actuality going -- again

hard it’s really moment. to the So, predict at

Vivek Arya

get follow-up, from think what $XXX million $XXX to to I TSMC the to next XG. I I opportunity, And smartphones the they you in around penetration about And outlined past said, if million expect XG all as converted think year. be mid-teens, a believe

let’s does it million some converted, from math you are have do and part of a then station mean, does in work TAM, So, the for it’s mid-teens linear way? the math So, million smartphones a mid-teens $XXX perspective a similar $XXX to say, like base also?

Mark Jagiela

Yes.

So, question. somewhere XXXX, XG the is increment is smartphones to majority of The XXXX, what that’s on the year said an we in we’ve million And what Much $XXX good much past with XG when kind millimeter is that million around general. in based that $XXX crossover wave. as sub-XG, not but impact of capability, has XG we as next millimeter see which wave would smartphones a of see may for bump. in

However, has the $XXX year strong I bump from probably of would million million to this been so infrastructure so what is demand we’re that $XXX that of million, $XXX this XG. year seeing suggest that or that

lot thing infrastructure comes little piece Now, the of extent little to phone next will in in for a is think the millimeter with it. subsequent a year greater up bit base sub-XG capacity kick stations, then wane will as built wave, through as the in. next to out then bit years likely how years a go a few run we kick first. the about gets That and It’ll to and

Operator

next Go from ahead. question with comes Arcuri Your UBS. Timothy of line the

Your line is open.

Timothy Arcuri

follow lot. what I wanted just a Mark, just you up Thanks said. on to

year, adding then coming to maybe SOC XG is from? is about we increment, the began year, other $XXX went we was we’re So, that million for and $XXX at $XXX million TAM million and And now if for X.X. where to X.X, X.X the the this

Mark Jagiela

I general there. type applications in, computing big strength say, there’s and of out sort would Well, digital AI

X as driven MIMO complexity RF I general, extra related of sort well. not strength XG this handsets a lot test think, the of the XG the of of year demand there’s processors, in the but in phones has and side G, just also

-- phones the So, And other phones are the of digital XG it’s side. all I’d sort the principal half of on say, equation.

Timothy Arcuri

had guess, in Industrial And then, I a I Automation. question

price is price. there So, we’ve suffering heard with of trends. lot competition, at to obviously business But, offerings a respect about UR, industry lower is I the a also some coming now some mean, from

now is with Techman think, I partnered OMRON.

a a not So, more this also, about of out amount to I being lot really earnings you concerned of that strategy term about what went seems sort investor couple bit there $X whether the are and talk or your of deterioration longer going view your you money to happening decent questions a that? your by getting So, about like And years? something a billion think some there accretive that that for of in this is? of company a and that get that this core be lot business sort Can for is that’s changes a how in XXXX to you concerns. spent people think of do context be a of you business.

Sanjay Mehta

I’ll Hi, comment UR competition Yes. first. Sanjay here. on pricing it’s the

our and UR there When all, of first this lower. win-loss competitors out up the other is much obviously competition, think, ticked look slightly. from I margins pricing that’s actually evaluate quarter we at

However, we significant front. haven’t business lost on that

product have we base, and think, appropriately. a recognized offering, priced I So, customer being it’s it’s the quality well by

think, and UR case yes, the And not with bit currently, so, up But, of that’s business pricing. a will price standpoint, a from a competition from perspective. necessarily eventually levels little to deal losing the we planning have where I quality are we’ll we’re get that

long-term set a I of higher complemental offerings need be of my remarks, consider as payload, there’ll perspective this or out product portfolio of a Industrial which think, scale portfolio and synergies of completing go-to-market Mark’s both, and to think, complement with in example. entire I in on you coupled this From strongly AutoGuide, That with our of Teradyne believe some the portfolio. competencies, Automation. just the in in potential another And very MiR is the we core prepared

Mark Jagiela

it’s but UR. comment strongest year this home also, growing its deflator, them not would the that’s an in Techman interesting and around We’ve specific, And talked even -- turf of just on and price OMRON. a Japan, really as with it’s region about product, I our

It’s is is we somehow I more causing think, in effects. UR in or price slowing competition that macroeconomic not the general really thought the it. growth see competition the of So, how sort

Operator

of ahead. line Go CJ Muse the with from comes Evercore. question next Your

is Your open. line

CJ Muse

mix you we question. I Yes. first margins question taking as to September Good December. the and guess, gross from Thank regarding move morning. for

which remarks, for I imply lower margin Test roughly growing think, test and overall calendar the believe System you your about talked that’s flat, would business. year, in prepared I about storage XX% your

in within SOC sequential Historically, driving drivers more that’s So, is to core other the what’s there been your margins? curious gross business based, curious decline mobile contributing but that? it’s if

Sanjay Mehta

It’s Yes. Sanjay here.

So, bit think, it’s the change tad, tied in and Semi margins mix, gross business to to I so margin QX and of the business. little Test roughly. product get percentage Semi our -- of But, had mix favorable has the a We kind to XX% a as same XX% specifically Test that’s of driving expected. kind plan down

CJ Muse

just there seeing or other curious, in mean SOC within similar that guess, to a pickup mean, mobility? does have that drivers mobility I margins we’re are I

Mark Jagiela

planned. as is mix the Overall, we

not continued mobility. are in strength is a that. driver. anything more seeing It’s That We than key

CJ Muse

guess, follow-up, I is pretty share the of And as of XX% incredible. north in memory

move about thinking kind And particularly for you’re as and the how I through we higher as DDRX requirements walk X positioning UFS of test, guess, to as and move can you XXXX, competitive to your the there? NAND well so, standards

Mark Jagiela

Yes.

share love low. So, is are there XXXX is NAND the this inflated a share sort because is new year great. would test been say of relatively buying is position it. than the DRAM will DRAM, small. trends entering, have space still of and it’s product quite portion our of we we’re better has DRAM the our those But, that line. We low That XX% likely I that two helps bit in

down could about high should operating the the memory, $XXX think market -- sort side be be market going on if XXXX, routinely that trend and our But, likely if market year about about we it’s we about of the out, for going we and trends line we’ve talked of if DRAM the million, range given XXs. if million mid-XX% is into we of line back, year our is products $XXX in view. to share trend next the this another couple So, the years that think come cited, you think

Operator

Your comes Stifel. Go the next with Brian ahead. of question line from Chin

Your line is open.

Brian Chin

current morning. business. Thanks on ask sort Automation Good would of few for my Congratulations Industrial UR results. the Hi. nice guess, questions. letting us question first I on be and the

But, more if whole for I can for and missed And the of this. a in verticals flush as XXXX? sorry, expected Also, on growth at, underserved also, IA curious kind current UR regions is margins heavily invest in you out the you what some UR? rate just expect will in, you this the of IA in think business it relates year? as where come to And

Sanjay Mehta

Yes.

I Automation an Industrial think, for us the be expect to So, from XXXX. in you should teens perspective,

Mark Jagiela

Operating margin target growth. of

Sanjay Mehta

Growth.

yes. so And --

like. different So, MiR from pro then, XXXX from consumer and a maybe XXXX, verticals acquired teens. on And electronics And -- April, in about a think we expected that perspective, around as forma, that’s be the forma bit X%-XX% as think in it’s basis. basis. then, an investment to I and should Pro full-year the think, and you over an on reported little a lower,

Mark Jagiela

look had in a and think, the distribution Yes. the geographically, United U.S. North network. we as an light been I example, our as America some areas we’ve at of we’ve And States that little

verticals leaned haven’t we strong. will front, into It’s not but we do remains more going haven’t out. disproportionately. And the have I where on we forward. concentration, we’re think like we fill electronics that invested looking area see that And electronics, that’s So, it to one in

Brian Chin

helpful. Got That’s it. Okay.

some just you in that terms go vehicles, kind for Mir? And to up switching to more then And of timeframe that AutoGuide, sort I I partners, the will So, of if talked a curious guess maybe maybe in acquisition maybe you’ve direct with maybe sale you’ve quite perhaps about would imagine standpoint? accretion market than that from UR then, leveraged some gears it extensive of you’ve recent and with years. IA -- the seasonality, integration the the XQ distribution seasonal speed of those case, the and seen might autonomous of differently not in sounds like the bump was

Mark Jagiela

Yes.

we right. of won’t that predominant versus in early be expand exactly and sales which story going a direct opportunities will there from it be have do enterprise the the come larger majority But AutoGuide other direct that’s and and the partners, channel few developing here, sales big XX-plus-percent So, MiR accounts. It’s the we is be and tend customer the or that. will the channel, that approach, we’re today approach UR, way enterprises through the classic will the the at for just not to or

Operator

Toshiya Your Hari next comes of Sachs. from Goldman question the line with

line open. Your is

Toshiya Hari

is How Mark, the NAND improvement to in shift wanted much to on real share mix of Memory been Test that, DRAM any your and follow share kind the XX% the being Memory that due lower price TAM, them? within the it’s gains of from at have of much being competitor? butter Test given your and business. year, the seen has to low I up expense market range. competitor, retaliation And related The for to this better, and bread how of of that is you due sort

Mark Jagiela

So, would abnormal very I activity I of say in be this what earlier this DRAM that environment. would kind pricing is little weak about And said year.

think more maybe out XX%-XX% our you share XX%-XX%. like if be the way normalize about is it DRAM, to So, would

business position at that’s And basically so, probably And up at point. existing more picking memory manufacturers. our share this natural we’re

China above which the some of ball traditional And share China, real that at with. gains for share globally. of there’s emerging competing in players So, might of think you share in kind kind is our our jump And suppliers memory. there’s happening we’re average then that are a

sort of to at combine natural put us XX%-XX% what are pieces two that those point. So,

Toshiya Hari

NAND assume, memory it. in activity has been And side most China far as so of the in DRAM? I to opposed on the Got

Mark Jagiela

both down both. think there’s it But, areas, I don’t activity I we would too activity. Well, in see break much.

Toshiya Hari

few, big remind mode overnight? not a you in is I commentary that’s Test us But, today? how you’re big as if a could bottom, customers’ on in the the know sort And it sub-segment downside, of it’s say analog of close past some to further there then, business that to how within been Can is that pretty Semi And test. follow-up Okay. quick be quarters. for fair given your several that or correction QX? was

Mark Jagiela

Yes.

and the is area the $XXX $XXX it’s million million range. related there market low related when sort and of purest MCU oscillates that. that that I $XXX bit to in year. to end is and trends This probably discussions even And of that’s a is a had see say a another automotive, years down coming obviously we of year, automotive year, million for general bleeding in months And at the Then, is if a nine $XXX in logic. the we to year, traditionally of the also think, analog, sort analog stay recover. it’ll automotive. to down linear its this the to start in a end probably quite this a strong perhaps past sense, below down analog probably into sort little million. we couple hold, another up of of -- That’s on of the range $XXX bit it’s linear into that And million going at before between segment to market this year low

Operator

Suisse. Credit of the line John from next with question Pitzer Your comes

ahead. line open. Suisse, go Pitzer Your is with John Credit

Your is open. line

Andy Blanchard

Okay.

Let’s move on, please.

Operator

Certainly.

from of question Go the Cowen ahead. Krish with next Sankar and Your comes Company. line

is open. line Your

Krish Sankar

I question. a sales of there from Mark, to I Test a Test SOC taking in couple follow-up. I them. asked plus SOC or time coming how this way of Yes. too. is Thanks had I Test quantify XG? Wireless think, Hi. much your Is last for Then, my a had

Mark Jagiela

don’t you. for broken well I down we that think have XG, From

I can’t for break going But, it So, my be off you the no, that on of that’s easily. to can’t something not head. out the I fly I’m able we’re here. to do do sure too top

Sorry.

Krish Sankar

Does it you’ve acquisition and defensive hardware on AutoGuide. have MiR UR road? worries. factors technology acquired competition. like external looks sense vision-based be But, macro growth No of you. are is years, last Industrial understand, the I to couple a potential Got the optics strategy. has more commoditized a your over a down make I It slowing. asset question a now and that Automation like and or robotics a software And than to to the go down there then, downstream

Mark Jagiela

Yes.

on there hardware. rainbow? grow to the will is with owned the value strong hardware software, at But, the we’ve I through that I money think, software isn’t second I that another where has the we around think, not a that. and then, the hardware, the gold in in that the do And be been end all time sort of hardware software, of X.X continues there commodity more be. of captured and however. years is And just it’s to think the something and is and market to would it’s the over reiterate UR is pot powerful throughout conjunction going more that of a have differentiation that I is at view be. the expense can incredibly the don’t that point I believe

a some it’s something looking hardware disabuse software. the at. do So, But, We have wouldn’t for capability I sake to platform we’re around good that. of develop

interesting. think, both and I attractive they’re

Operator

question comes Baird. the line of with next Eastman Go Richard ahead. from Your

Your line open. is

Richard Eastman

IA around UR. the business Just and particularly

China Automation would Asia Japan. But, as there, some Asia question, You made both Industrial in strength the there. We’ve maybe now that in there that of you had second then, you a strength or attribute this agreements end-markets there the where comes have slowed reference as some have to in backlog and We And some again, added product. picking certainly similar from. well. verticals mix -- curious thoughts. bin strength, a because, Pac what different or Is to just enterprise introduced of distribution, to

in guess towards further As that, would does at sure I I’m expect best your the be first or do and here inflect when mean, of there? this, drop it we to bit would fourth a quarter next quarter forward move growth but what year core maybe UR in we seasonally but UR, little not middle with start you you if UR? to referenced the

Mark Jagiela

point last on first. that So, maybe

us. UR little grow a think, for fourth is will quarter over -- year-over-year it fourth because but fourth quarter single bit. to It typically be to be big quarter, bump up likely I third in compared will a digits is going probably it won’t

you and in U.S. output indicators in the macroeconomic that of industrial this of and if at down. fact the look doing We’re light the Europe, they’re weak significantly

see you example, you’ll suppliers If anywhere we’re roughly XX% tool down are year-over-year, announced automation it’s machine or XX% for trends, single-digit sales from traditional where whether of to growth. that that of specific low at look some companies they the industrial recent have the Japanese

headroom over to the So, XX-point we traditional going where I guys. XX, will with we’re think market automation gap that oscillate cyclical have industrial on of kind a top those of

America So, us grow the the it’s is And North Automation. to the that when see hard can will to even think in year, we industrial one, that call. sector an of conditions for in economic We think, question manufacturing expansive mode. return next and current Industrial Europe I real in light we

it single So, But, for is we to to XX think range? that into digits to It’s tough XX little that going it’ll next be or us be a call right now. a year back year. growth

really Japan is automation, able there. specifically, demand winning. the And Robots turf value Japan win demographic in it’s interesting as decided that that cobot of They’ve the home On the somebody is business fact, OMRON’s tap seeing for productive. despite to we’re is product stay amount of a Japan. there, robots Universal our a to it to earlier, there, in disproportionate collaborative but them sees is requires they’ve issue got country that a product mentioned

So, that’s us. encouraging to all very

That not or at actually And the China, similar, There indicators a demographic if are they’re you as And they believe world. as concern. is even a the other in elsewhere it’s not, and of companies quite lot industries there. and of issue has in PMI down in Japan, staff in some lot much is look though it resulted in finding there uncertainty China invest, of economic do downturn a continuing manual an to in this to labor.

Even closing in and robots is got still at there automotive Eddie automotive steady clip, collaborative because a letting people, suppliers is China good they down, go cases industry they’re have the factories, though trend elsewhere. the We long-term line. they’ve and adding -- see in some

that all of to is me positive. So,

think, I an collaborative we’re ROI upturn it’s economic for is robots learning, not immune. we’re whether or The fantastic, downturn.

growth, curve So, still I But, throughout it’s always expect believe we going we’ll to can and the of kind the single-digit these here, ride we’d are. fight and downturn above get through to and we like cycles.

Operator

comes question the next Ho of Bank. from Sidney Your with line Deutsche

open. Your is line

Sidney Ho

clarify I one my wanted taking to question. thing. for Thanks

will added You there I but in decline year, said the million XG some TAM handset will any is the revenue on are real be is of flat? infrastructure the infrastructure next a of until early, year, be which that it’s kind that’s couple wave, about on but But opportunity maybe big millimeter side. the XG-related you years and of net side the next implying the know away. $XXX year the pause next guess, pickup to I incremental XG. a this for

Sanjay Mehta

here. It’s Yes. Sanjay

-- will believe we in I the million $XXX past million. think I uplift we that XG about to the yes, to we that million TAM have of couple believe a believe roughly market. a said it’s hundred $XXX all-in-all,

capacity out is trying we’re now, rollout to created right Mark utilization the said in of for the earlier, trying testers have calibrate, ready we’re to of XXXX. XXXX, customers getting in the sub-X so, the build but And to and as infrastructure that calibrate handle high, throughput is required the

we’ll in to best update trying of triangulate of kind our we’re estimate QX. provide and that So, an

sub-X wave, the perspective, following should in XXXX, think in I and increase and you handsets millimeter from first infrastructure handset think, think is I then, a also then about XG years. to going

of millimeter first will it And and to going this then with in wave, handsets more wave sub-X so XXXX, started we infrastructure, there the infrastructure handsets XG adoption, XXXX is then be way XG now. XXXX for and see and

Sidney Ho

if you still a XG started As I opportunities, at look decade, which now. the follow-up, maybe early right growing back believe this

opportunity How plateau XG If start it going you the how shape grew for to be you over well that long XG? how and time is as think for eventually as of how falling guys, TAM, do over the -- the off. you than it look cycle, at to of the took the the it shape different next

Mark Jagiela

quite into markets. that break two LitePoint when spike saw to have which And out, There’s over to want those standards fueled is LitePoint of I test tremendous by that XG, the think, shifts. I rapidly. different we rolled shifting handsets XG So, happened business

huge is was bust. and XG grew there’s you $XXX boom business so, think under because it’s billion of the It I umbrella, to go LitePoint’s for that in sub-standards, a slower -- grew a and more upwards $X slower million. of LitePoint is then rollout. when XG think to there And going size, more like a business, LitePoint’s market

different the has all growth XG think, sort than other I been issue. phones. and complexity of associated in features it’s evolution of from change a Test, the to Semi the standard, standards Semi In its Test benefiting sort with the less of

Test mobility Semi So, had we’ve of strong demand. now decade a almost

to Some the correlated complexity to standard, built other and the much you areas, in, you getting the but attribute in other the attribute of image growth processor, perhaps et-cetera. it sensors, apps that of phone like the can AI -- more XG the

be Semi the but we a when XG the difference. for test is more there a think a difference technological there is XG test millimeter the is look world Semi I require The than LTE millimeter wave wave is same. much silicon is step-in to So, going higher be Semi for bigger subtle for intensive Test. at net step One XG going to go the to Test, the impact The at Test. frequencies subtle is difference, intensity and result

years. And it metered the out balloon. will be So, that’s over

a constant. is growth complexity The

I one continues. think that So,

got more top a bit with more it of complex. you’ve a of millimeter wave little so being bump And on

So, forward, test about than backwards how is looking marginally I intensive looking more think it.

Sidney Ho

Test a SOC question this your share mid in year of maybe it take Great. little get would year and probably up well XX% to you ago, for me. and bit Last XXs, year. off I dropped coming A be because it last of years level? couple should guess, to the was whatnot. the better back what next mix as for end-market customer guys share But, back

Mark Jagiela

a got get millimeter I we’ve wave. of rollout overall, to think, of Well, kind

a has the a and business. in it’s story test RF of memory we playing out what that part. more is the as sort And play less there out good at. drives up key we’re elements as solid That of that’s little to that. picking two And AI look intensity Edge key but So, at are of test would also a type important, then, lot

in automotive get the digitally consumer and cloud. executing in been that developed to algorithms devices inference have intensive have and in are We these more products that

strong leg of gets That that We’re there. stool us there. the growth is of third the sort

Operator

Duley with Your next question of the Steelhead. comes from David line

open. is line Your

David Duley

Thanks handset? on XG A there questions. question Yes. at XG is complexity Could I more in involved some a XG more how my in power is things test you realize time more content taking much management of handsets. take versus a stab and and phones couple RF handset how for a a great? is much roll versus next second the handset is, parts. be plans But, time if out estimating have And the XG you at intensity in take to there acceleration that’d stab test more could you the XG, XG with year? seen customers’ with an

Mark Jagiela

that I’ll in rollout So, an second actually, -- there’s point of -- on the point, happened XG general, leave year. on the yes, second acceleration that’s this

in and today? the and base handsets. So, pace XG if accelerated stations of beginning It’s you went year back of rollout in what’s the said quite to the both

It’s in the and significant all out in are of of is fast -- where difference are to the starting point a the acceleration really that that stations that the ahead sub-XG handsets world. roll is rest the However, sub-XG. in rolling is base Asia, the of most

what’s advantage and expect take would in That’s But, infrastructure lot too. Now, that. get really little to to of bit that. a be the I next place States expected, isn’t that broadening a probably going the of year, we’ll of United and in Europe of

running thank been because God, But, to bit going for great it’s anchor. be a that’s our So, of Asia us. is

different there’s the sure the ways, you…? the the the one is the testing question handsets Which you’re all rolls phone. silicon time testing LitePoint does I’m asking. and that There a are of Now, XG into of there’s XG question, in then which phone, that not test two

David Duley

referring in phone. was of I to the silicon all the

Mark Jagiela

Okay.

silicon. the side, that cases silicon tough for are one now, a on the test right call early, because early developing still people one’s So, to XG

stupid for extrapolate markets. to as we the silicon of all those specific optimized, much tends over you there’s early up if today pilot expect antennas XG and production, get will the them as go a always, they numbers come test Now, And there production. are there’s higher in is all phase -- with which modem. of And times, have will to they test to transceivers, be it next year

or end, So, handful, number people that’s the see kind test rough time to all XX% use. a sort But, I going minus plus when of think, increases in finally sort of we we’re maybe small, through this.

Sanjay Mehta

one just on add I XG think, the acceleration. quick point I’d

the lot that I millimeter engineering seeing we’re think, endeavor. efforts and a on support of wave, testers to

handsets, would as a we So, plus. come up I year in would said the believe earlier, ramp out,

efforts in on engineering the millimeter We wave. are seeing XG an uptick

David Duley

Okay, great. Thank you.

Andy Blanchard

question, just we operator, time have please. final in And one to Okay. sneak

Operator

Certainly.

of line Your Diffely with from the D.A. next Davidson. question Tom comes

Your line is open.

Tom Diffely

the could the it But, there? I drivers you market. add bit do it’s play as a was technology more a view bit quite your it know, year. more you this And little I hoping what automotive view down as well? or is on is capacity a long-term

Mark Jagiela

of expect, above volumes but let’s like of before, think, that -- industry down in trend manufacturers And return test year, will in automotive the automotive what’s are design that driver next cars. that unit in say, to And least a the the flowing the a elect primarily of such next to technology place I in into rest terms from year. growth. of the I for year. It’s automotive in kind automotive growth is line late that move of last over The should the technologies for I next line unit driving, more tooling five volume put important. much at Yes. to decade point silicon or going view, the the for world’s driver. was relates of the because off, growth are be not trend that lot the much said This complexity of the And test But, autonomous assistance probably holding years. of

going grow to probably range. market modeled at the average, that we’ve we greater So, in X% that XX% look X% to of on sort it’s of rest test whereas the than

Tom Diffely

appreciate Great, very helpful. I it.

Andy Blanchard

And ahead. and Bye, to everyone. you bye. talking Thanks, weeks days Great. we in look the with forward

Operator

this today’s conference Ladies and call. concludes gentlemen,

You may now disconnect.

Teradyne (TER) 23 Oct 192019 Q3 Earnings call transcript