Teradyne, Inc. · NASDAQ:TER
Teradyne — Q3 2023 Earnings Presentation
24 slides from Teradyne's earnings presentation, Oct 26, 2023
Slide 1: Financial Results for Q3 2023
Financial Results for Q3 2023 October 26, 2023
Slide 2: Safe Harbor (page 1 of 2)
SAFE HARBOR (page 1 of 2) This presentation contains forward-looking statements regarding Teradyne’s future business prospects, results of operations, market conditions, earnings per share, the impact of supply chain conditions on the business, customer sales expectations, the payment of a quarterly
Slide 3: Safe Harbor (page 2 of 2)
SAFE HARBOR (page 2 of 2) Important factors that could cause actual results, the 2026 earnings model, earnings per share, use of cash, dividend payments, repurchases of common stock, or payment of the senior convertible notes to differ materially from those presently expected include: conditions aff
Slide 4: Business Update and Outlook
Business Update and Outlook Greg Smith, Teradyne President and CEO 4
Slide 5: Q3'23 Summary
Q3’23 Summary Sales of $704M, Gross Margins of 56.6%, Non-GAAP EPS of $0.80 Q3’23 Guidance Range 56% - 57% $650M - $710M $0.61 -$0.81 Quarterly Revenue Gross Margin % Non-GAAP EPS(1) • Semiconductor SOC strength in • Gross Margins declined from • Non-GAAP EPS $0.80 Automotive, Image Sensor Test Q2’2
Slide 6: Q3'23 Summary, 2023 - 2024 Outlook
Q3’23 Summary, 2023 - 2024 Outlook • Q3’23 sales and earnings near the top of our guidance range on above plan Robotics shipments and resolved supply constraints in Test • 2H’23 results playing out inline with July outlook • 2023 SOC Test Market Forecast: $3.7 - $4.1B, consistent with July outlook •
Slide 7: Third Quarter 2023 Financial Results and Fourth Quarter 2023 Guidance
Third Quarter 2023 Financial Results and Fourth Quarter 2023 Guidance Sanjay Mehta, Teradyne Vice President and Chief Financial Officer 7
Slide 8: Q3'23 Non-GAAP Results
Q3’23 Non-GAAP Results Q3’22 Actual(1) Q2’23 Actual(1) Q3’23 Actual(1) Sales $827M $684M $704M Gross Margin 58.7% $485M 58.8% $402M 56.6% $398M R&D 13.5% $112M 15.4% $106M 14.8% $104M SG&A 16.4% $136M 21.3% $146M 19.7% $138M OPEX 29.9% $247M 36.7% $251M 34.5% $243M Operating Profit 28.8% $238M 22.1%
Slide 9: Q3'23 Segment Summary and Key Highlights
Q3’23 Segment Summary Semiconductor System Test Wireless Test Robotics Test 3rd Quarter $498M $83M $37M $86M Sales Sales down 28% vs Q3’22 Sales down 4% vs Q3’22 but Sales down 14% vs Q3’22 Sales down 20% vs Q3’22 Mobility demand soft Storage Test shipments down due to lower consumer PC demand stabi
Slide 10: Balance Sheet & Capital Return
Balance Sheet & Capital Return Q3’22 Q2’23 Q3’23 Actual Actual Actual Cash and Marketable Securities $887M $813M $820M Inventory $311M $347M $323M DSO 58 Days 66 Days 59 Days Capital Additions $39M $39M $35M Depreciation and Amortization(1) $41M $41M $41M Free Cash Flow(2) $233M $104M $140M Buybacks
Slide 11: Q4'23 Non-GAAP Guidance
Q4’23 Non-GAAP Guidance $s in millions, except EPS Q3’23 Actual(1) Q4’23 Guidance(1) Sales $704M $640M - $700M Gross Margin 56.6% 56% - 57% OPEX 34.5% 38% - 35% Operating Profit 22.1% 18% - 22% Effective Tax Rate 15.7% 16.5% EPS $0.80 $0.61 - $0.81 Diluted Shares 163M 162M 11 (1) See attached append
Slide 12: Q3'23 Summary, 2023 - 2024 Outlook
Q3’23 Summary, 2023 - 2024 Outlook • Q3’23 sales and earnings near the top of our guidance range on above plan Robotics shipments and resolved supply constraints in Test • 2H’23 results playing out inline with July outlook • 2023 SOC Test Market Forecast: $3.7 - $4.1B, consistent with July outlook •
Slide 13: Supplemental Information
Supplemental Information 13
Slide 14: Teradyne Non-GAAP Earnings Model
Teradyne Non-GAAP Earnings Model Financial Model (1)(2) 2022 2026E (New Model) 2022 Sales Mix 2026E Sales Mix(3) TER Revenue ($M) $3,155 $4,500 $5,550 13% =$3,155M 19% =$5,025M(3) Growth off 2022 9% 15% Gross Margin % 59% 59% 60% OPEX % 32% 28% 26% 87% 81% Operating Profit % 28% 31% 34% Automated Ro
Slide 15: History of Capital Allocation
History of Capital Allocation • Since 2015, 78M shares repurchased at an average price of ~$48 per share ($M) 2015 2016 2017 2018 2019 2020 2021 2022 9mo'23 Cumulative Buybacks(1) 300 146 200 823 500 88 600 752 349 3,759 Dividends 51 49 55 67 61 66 66 70 51 537 Acquisitions 283 15 1 194 115 9 12 - -
Slide 16: Semiconductor Test Market Growth Trends Are Favorable
Semiconductor Test Market Growth Trends Are Favorable Semiconductor Test (1) SOC Memory $6,000 SOC market powered by unit growth, complexity, new technology $5,000 (3) adoption Memory test driven by $4,000 bit growth, diversity, higher bandwidth $3,000 (2) $2,000 2023 Market Sizes $1,000 (3) $0.95B
Slide 17: Appendix | GAAP to Non-GAAP Reconciliation
Appendix | GAAP to Non-GAAP Reconciliation In addition to disclosing results that are determined in accordance with GAAP, Teradyne also discloses in this presentation and on the earnings call non-GAAP results of operations that exclude certain income items and charges. These results are provided as
Slide 18: Appendix | GAAP to Non-GAAP Reconciliation
Appendix | GAAP to Non-GAAP Reconciliation Quarter Ended October 1, % of Net July 2, % of Net October 2, % of Net 2023 Revenues 2023 Revenues 2022 Revenues Net revenues $ 703.7 $ 684.4 $ 827.1 Gross profit GAAP and non-GAAP $ 398.3 56.6% $ 402.5 58.8% $ 485.4 58.7% Income from operations - GAAP $ 14
Slide 19: Appendix | GAAP to Non-GAAP Reconciliation
Appendix | GAAP to Non-GAAP Reconciliation (1) Restructuring and other consists of: Quarter Ended October 1, July 2, October 2, 2023 2023 2022 Employee severance $ 4.7 $ 5.1 $ 1.2 Contract termination 1.5 - - Other 0.6 1.2 0.6 $ 6.9 $ 6.4 $ 1.8 (2) For the quarters ended October 1, 2023 and July 2,
Slide 20: Appendix | GAAP to Non-GAAP Reconciliation
Appendix | GAAP to Non-GAAP Reconciliation 20
Slide 21: Appendix | GAAP to Non-GAAP Reconciliation
Appendix | GAAP to Non-GAAP Reconciliation 21
Slide 22: Appendix | GAAP to Non-GAAP Reconciliation
Appendix | GAAP to Non-GAAP Reconciliation Q3'22 Q2'23 Q3'23 Q4'23 Low Guidance Q4'23 High Guidance $'s % of sales $'s % of sales $'s % of sales $'s % of sales $'s % of sales GAAP Operating Expenses $254 31% $263 38% $254 36% $249 39% $251 36% Intangible Asset Amortization -$5 -1% -$5 -1% -$5 -1% -$
Slide 23: Appendix | GAAP to Non-GAAP Reconciliation
Appendix | GAAP to Non-GAAP Reconciliation • Teradyne determines non-GAAP operating cash flow (“Free Cash Flow”) by adjusting GAAP cash flow from operations excluding discontinued operations, less property, plant and equipment additions. Free cash flow is considered a non-GAAP financial measure. Ter
Slide 24: Appendix | GAAP to Non-GAAP Reconciliation
Appendix | GAAP to Non-GAAP Reconciliation 2026 Model Range FY 2026 Low FY 2026 Mid FY 2026 High 2026 Estimated GAAP Diluted EPS $ 7.49 $ 8.74 $ 9.99 Add Back Intangible Asset Amortization $ 0.01 $ 0.01 $ 0.01 2026 Estimated Non-GAAP Diluted EPS $ 7.50 $ 8.75 $ 10.00 24