Teradyne, Inc. · NASDAQ:TER
Teradyne — Q3 2021 Earnings Presentation
29 slides from Teradyne's earnings presentation, Oct 27, 2021
Slide 1: Financial Results for Q3 2021
Financial Results for Q3 2021 October 27, 2021
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, the impact of the COVID-19 pandemic, results of operations, market conditions, earnings per share, the payment of a quarterly dividend, the repurchase of Teradyne common sto
Slide 3: Safe Harbor, page 2 of 2
SAFE HARBOR, page 2 of 2 Most recently, on September 9, 2021, President Biden issued Executive Order 14042 requiring covered employees of certain Federal contractors and subcontractors to be “fully vaccinated,” unless legally entitled to an accommodation due to a disability or religious belief, prac
Slide 4: Business Update and Outlook
Business Update and Outlook Mark Jagiela, Teradyne President and CEO 4
Slide 5: Q3'21 Summary
Q3’21 Summary 16% Sales Growth and 35% Non-GAAP Earnings Per Share Growth vs Q3’20 $1,000M $2.00 $3.0B $5.00 Sales EPS $4.50 $2.5B $2.8B $4.61 $800M $4.00 $1.50 $2.4B $3.50 $2.0B $3.52 $600M $3.00 $1,086M $1.5B $2.50 $951M $1.00 $1.91 $1.6B $400M $819M $1.59 $2.00 $1.0B $1.97 $1.50 $1.18 $0.50 $1.00
Slide 6: October 2021 Summary
October 2021 Summary • The Q3 Headlines: – Test and Industrial Automation demand remained strong – Test shipments higher than expected – Supply constraints held back IA growth • Test shipments sales grew 14% from Q3’20, grew 17% in first 9 months vs ‘20. • SOC Compute, Automotive, and Analog test se
Slide 7: Low Penetration Rate Highlights Growth Opportunity For UR and MiR
Low Penetration Rate Highlights Growth Opportunity For UR and MiR • Cobots are used in fewer than 1.5% of 9 million potential applications(1) • UR 50% year to date growth vs 9mo20 • AMRs are used in fewer than 2.5% of 7 million potential applications(1) • MiR 40% year to date growth vs 9mo20 1) Pene
Slide 8: Third Quarter 2021 Financial Results and Fourth Quarter 2021 Guidance
Third Quarter 2021 Financial Results and Fourth Quarter 2021 Guidance Sanjay Mehta, Teradyne Vice President and Chief Financial Officer 8
Slide 9: Q3'21 Non-GAAP Results
Q3’21 Non-GAAP Results $s in millions, except Q3’20 Actual(1) Q2’21 Actual(1) Q3’21 Actual(1) EPS Sales $819M $1,086M $951M Gross Margin 56.0% $459M 59.6% $647M 60.1% $571M R&D 11.6% $95M 10.1% $110M 11.3% $107M SG&A 14.1% $116M 12.9% $140M 14.2% $135M OPEX 25.7% $211M 23.0% $250M 25.5% $242M Operat
Slide 10: Balance Sheet & Capital Return
Balance Sheet & Capital Return Q3’20 Q2’21 Q3’21 Actual Actual Actual Cash and Marketable $1,341M $1,418M $1,450M Securities Inventory $191M $226M $224M DSO 65 Days 73 Days 57 Days Capital Additions $63M $35M $29M Depreciation and $42M $42M $42M Amortization(2) Free Cash Flow(3) $280M $172M $493M Bu
Slide 11: Q3'21 Segment Summary
Q3’21 Segment Summary Semiconductor Industrial System Test Wireless Test Automation Test Quarter Sales $688M $103M $69M $91M 3rd Sales up 16% vs Q3’20 Sales down 13% vs Sales up 70% vs Q3’20 Sales up 32% vs Q3’20 Q3’20 Mobile applications Wi-Fi 6/6E, UWB and UR sales up 46% from Key Highlights proce
Slide 12: Q4'21 Non-GAAP Guidance
Q4’21 Non-GAAP Guidance Q3’21 Q4’21 $s in millions, except EPS Actual(1) Guidance(1) Sales $951M $820M - $900M Gross Margin 60% 59% - 60% OPEX 25% 31% - 28% Operating Profit 35% 28% - 32% Effective Tax Rate 14.8% 14.8% EPS $1.59 $1.14 - $1.40 Diluted Shares 176M 174M (1) See attached appendix for GA
Slide 13: History of Capital Allocation
History of Capital Allocation • Since 2015, 65.6M shares repurchased at an average price of ~$38 per share 2015 2016 2017 2018 2019 2020 9mo21 Cumulative Buybacks $300M $146M $200M $823M $500M $88M $406M(1) $2,465M(1) Dividends $51M $49M $55M $67M $61M $66M $50M $399M Acquisitions $283M $15M $1M $19
Slide 14: October 2021 Summary
October 2021 Summary • The Q3 Headlines: – Test and Industrial Automation demand remained strong – Test shipments higher than expected – Supply constraints held back IA growth • Test shipments sales grew 14% from Q3’20, grew 17% in first 9 months vs ‘20. • SOC Compute, Automotive, and Analog test se
Slide 15: Supplemental Information
Supplemental Information 15
Slide 16: Teradyne Non-GAAP Earnings Model
Teradyne Non-GAAP Earnings Model Financial Model '19/'20 ’19/’20 Sales Mix 2019 2020 Avg 2022E (Old Model) 2024E (New Model) 11% TER Revenue ($M) $2,295 $3,121 $2,708 $2,700 $3,250 $3,500 $4,250 =$2,708M Gross Margin % 58% 57% 57% 58% 59% 58% 59% 89% Automated Test OPEX % 33% 27% 30% 32% 31% 29% 28%
Slide 17: Semiconductor Test Markets are Growing
Semiconductor Test Markets are Growing Semiconductor SOC(1) Memory $5,000 Test - $4,500 ~13% SOC market powered8 by CAGR % $4,000 unit growth, complexity, new technology $3,500 adoption $3,000 Memory test driven by bit growth, diversity, $2,500 higher bandwidth $2,000 ~19% $1,500 CAGR (2) 2021 Marke
Slide 18: 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 19: GAAP to Non-GAAP Earnings Reconciliation
Appendix | GAAP to Non-GAAP Reconciliation GAAP to Non-GAAP Earnings Reconciliation (In millions, except per share amounts) Quarter Ended October 3, % of Net July 4, % of Net September 27, % of Net 2021 Revenues 2021 Revenues 2020 Revenues Net revenues $ 950.5 $ 1,085.7 $ 819.5 Gross profit GAAP $ 5
Slide 20: Restructuring and other detail
Appendix | GAAP to Non-GAAP Reconciliation (1) Restructuring and other consists of: Quarter Ended October 3, July 4, September 27, 2021 2021 2020 Employee severance $ 0.6 $ 0.4 $ 0.5 Acquisition related expenses and compensation 0.3 0.3 (1.1) Contingent consideration fair value adjustment - - (27.2)
Slide 21: Nine Months Ended GAAP to Non-GAAP
Appendix | GAAP to Non-GAAP Reconciliation Nine Months Ended October 3, % of Net September 27, % of Net 2021 Revenues 2020 Revenues Net Revenues $ 2,817.8 $ 2,362.5 Gross profit GAAP $ 1,679.6 59.6% $ 1,336.0 56.6% Inventory step-up - - 0.4 0.0% Gross profit non-GAAP $ 1,679.6 59.6% $ 1,336.4 56.6%
Slide 22: Restructuring and other detail, nine months
Appendix | GAAP to Non-GAAP Reconciliation (1) Restructuring and other consists of: Nine Months Ended October 3, September 27, 2021 2020 Contingent consideration fair value adjustment $ (7.2) $ (8.0) Employee severance 1.2 1.2 Acquisition related expenses and compensation 0.3 3.4 Contract terminatio
Slide 23: Nine Months 2020 and 2019 GAAP to Non-GAAP
Appendix | GAAP to Non-GAAP Reconciliation Nine Months Ended September 27, % of Net September 29, % of Net 2020 Revenues 2019 Revenues Net Revenues $ 2,362.5 $ 1,640.3 Gross profit GAAP $ 1,336.0 56.6% $ 956.6 58.3% Inventory step-up 0.4 0.0% 0.4 0.0% Gross profit non-GAAP $ 1,336.4 56.6% $ 957.0 58
Slide 24: Restructuring and other detail, 2020 and 2019
Appendix | GAAP to Non-GAAP Reconciliation (1) Restructuring and other consists of: Nine Months Ended September 27, September 29, 2020 2019 Contingent consideration fair value adjustment $ (8.0) $ (16.5) Contract termination settlement fee 4.0 - Acquisition related expenses and compensation 3.4 2.3
Slide 25: FY 2024 Estimated GAAP to Non-GAAP
Appendix | GAAP to Non-GAAP Reconciliation FY 2024 Low FY 2024 High 2024 Estimated GAAP Operating Expenses as a % of Sales 29% 29% Less Intangible Asset Amortization as a % of Sales 1% 0% 2024 Estimated Non-GAAP Operating Expenses as a % of Sales 29% 28% FY 2024 Low FY 2024 High 2024 Estimated GAAP
Slide 26: FY 2022 Estimated GAAP to Non-GAAP
Appendix | GAAP to Non-GAAP Reconciliation FY 2022 Low FY 2022 High 2022 Estimated GAAP Operating Expenses as a % of Sales 33% 32% Less Intangible Asset Amortization as a % of Sales 1% 1% 2022 Estimated Non-GAAP Operating Expenses as a % of Sales 32% 31% FY 2022 Low FY 2022 High 2022 Estimated GAAP
Slide 27: Twelve Months Ended December 31 GAAP to Non-GAAP
Appendix | GAAP to Non-GAAP Reconciliation Twelve Months Ended December 31, % of Net December 31, % of Net 2020 Revenues 2019 Revenues Net Revenues $ 3,121.5 $ 2,295.0 Gross profit GAAP $ 1,785.7 57.2% $ 1,339.8 58.4% Inventory step-up 0.4 0.0% 0.4 0.0% Gross profit non-GAAP $ 1,786.1 57.2% $ 1,340.
Slide 28: Free Cash Flow 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 29: Operating Expenses, Tax and Q4 Guidance Reconciliation
Appendix | GAAP to Non-GAAP Reconciliation Q3'20 Q2'21 Q3'21 Q4'21 Low Guidance Q4'21 High Guidance $'s % of sales $'s % of sales $'s % of sales $'s % of sales $'s % of sales GAAP Operating Expenses $189 23% $258 24% $249 26% $256 31% $259 29% Intangible Asset Amortization -$6 -1% -$5 0% -$5 -1% -$5