Teradyne, Inc. · NASDAQ:TER
Teradyne — Q1 2022 Earnings Presentation
27 slides from Teradyne's earnings presentation, Apr 27, 2022
Slide 1: Financial Results for Q1 2022
Financial Results for Q1 2022 April 27, 2022
Slide 2: Safe Harbor (page 1 of 3)
SAFE HARBOR (page 1 of 3) This presentation contains forward-looking statements regarding Teradyne’s future business prospects, the impact of the global pandemic of the novel strain of the coronavirus (COVID-19), results of operations, market conditions, earnings per share, the impact of supply chai
Slide 3: Safe Harbor (page 2 of 3)
SAFE HARBOR (page 2 of 3) Following Russia’s invasion of Ukraine in February 2022, the U.S. and other countries imposed significant sanctions against t he Russian government and many Russian companies and individuals. Although Teradyne does not have significant operations in Russia, the sanctions co
Slide 4: Safe Harbor (page 3 of 3)
SAFE HARBOR (page 3 of 3) Important factors that could cause actual results, the 2024 earnings model, earnings per share, use of cash, dividend payment s, repurchases of common stock, or payment of the senior convertible notes to differ materially from those presently expected include: conditions af
Slide 5: Business Update and Outlook
Business Update and Outlook Mark Jagiela, Teradyne President and CEO 4
Slide 6: Q1'22 Summary
Q1’22 Summary Sales of $755M, Gross Margins of 60.2%, Non-GAAP EPS of $0.98 Industrial Automation up 29% Year over Year $1,000M 65% $1.60 $1.40 $800M 60% $1.20 $600M 55% $1.00 $0.80 $400M $885M 50% 59.5% 60.2% $1.37 $782M $755M 59.1% $0.60 $1.11 $0.98 45% $0.40 $200M $0.20 $M 40% $0.00 Q1'21 Q4'21 Q
Slide 7: April 2022 Update
April 2022 Update • Increasing SOC test demand, primarily in Automotive end market driving 2022 TAM to the high end of $4.6- 5.0B estimate range – Growing automotive device complexity, ADAS related processors and EV devices are long-term SOC test demand drivers • Memory TAM expected to remain at ~$1
Slide 8: First Quarter 2022 Financial Results and Second Quarter 2022 Guidance
First Quarter 2022 Financial Results and Second Quarter 2022 Guidance Sanjay Mehta, Teradyne Vice President and Chief Financial Officer 8
Slide 9: Q1'22 Non-GAAP Results
Q1’22 Non-GAAP Results $s in millions, except EPS Q1’21 Actual(1) Q4’21 Actual(1) Q1’22 Actual(1) Sales $782M $885M $755M Gross Margin 59.1% $462M 59.5% $527M 60.2% $455M R&D 12.8% $100M 12.4% $110M 14.3% $108M SG&A 16.6% $130M 16.1% $143M 18.6% $140M OPEX 29.5% $230M 28.6% $253M 32.9% $248M Operati
Slide 10: 2022 Q1 Key Highlights
Q1’22 Segment Summary Semiconductor Industrial System Test Wireless Test Test Automation Quarter $482M $119M $52M $103M Sales 1st Sales down 9% vs Q1’21 Sales down 11% vs Sales up 29% vs Q1’21 Sales up 26% vs Q1’21 Q1’21 2022 Q1 Key Highlights Mobility and compute end UR sales up 30% on 55% Continue
Slide 11: Balance Sheet & Capital Return
Balance Sheet & Capital Return Q1’21 Q4’21 Q1’22 Actual Actual Actual Cash and Marketable Securities $1,425M $1,500M $1,203M Inventory $262M $243M $259M DSO 70 Days 55 Days 67 Days Capital Additions $39M $29M $44M Depreciation and Amortization(1) $46M $41M $41M Free Cash Flow(2) ($1M) $302M ($37M) B
Slide 12: Q2'22 Non-GAAP Guidance
Q2’22 Non-GAAP Guidance Q1’22 Actual(1) Q2’22 Guidance(1) $s in millions, except EPS Sales $755M $780M - $870M Gross Margin 60.2% 60% - 61% OPEX 33% 34% - 31% Operating Profit 27% 26% - 30% Effective Tax Rate 16% 16% EPS $0.98 $1.00 - $1.29 Diluted Shares 173M 170M 12 (1) See attached appendix for G
Slide 13: April 2022 Update
April 2022 Update • Increasing SOC test demand, primarily in Automotive end market driving 2022 TAM to the high end of $4.6- 5.0B estimate range – Growing automotive device complexity, ADAS related processors and EV devices are long-term SOC test demand drivers • Memory TAM expected to remain at ~$1
Slide 14: Supplemental Information
Supplemental Information 14
Slide 15: History of Balanced Capital Allocation
History of Balanced Capital Allocation • Since 2015, 68.9M shares repurchased at an average price of ~$42 per share 2015 2016 2017 2018 2019 2020 2021 Q1'22 Cumulative ($M) Buybacks $300M $146M $200M $823M $500M $88M $600M $201M $2,859M Dividends $51M $49M $55M $67M $61M $66M $66M $18M $434M Acquisi
Slide 16: Teradyne Non-GAAP Earnings Model
Teradyne Non-GAAP Earnings Model Financial Model '19/'20 '20/'21 ‘20/’21 Sales Mix Avg Avg 2024E (Old Model) 2024E (New Model) 10% TER Revenue ($M) $2,708 $3,412 $3,500 $4,250 $4,600 $5,250 + 27% (2) =$3,412M Growth off '19/'20 7% 12% 14% 18% Automated Gross Margin % 57% 58% 58% 59% 59% 60% 90% Test
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 a nd 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 18
Slide 19: Appendix | GAAP to Non-GAAP Reconciliation
Appendix | GAAP to Non-GAAP Reconciliation 19
Slide 20: Appendix | GAAP to Non-GAAP Reconciliation
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 21: Appendix | GAAP to Non-GAAP Reconciliation
Appendix | GAAP to Non-GAAP Reconciliation (1) Restructuring and other consists of: Twelve Months Ended December 31, December 31, 2020 2019 Contingent consideration fair value adjustment $ (23.3) $ (19.3) Contract termination settlement fee 4.0 - Acquisition related expenses and compensation 2.5 2.5
Slide 22: Appendix | GAAP to Non-GAAP Reconciliation
Appendix | GAAP to Non-GAAP Reconciliation Twelve Months Ended December 31, % of Net December 31, % of Net 2021 Revenues 2020 Revenues Net Revenues $ 3,702.9 $ 3,121.5 Gross profit GAAP $ 2,206.7 59.6% $ 1,785.7 57.2% Inventory step-up - - 0.4 0.0% Gross profit non-GAAP $ 2,206.7 59.6% $ 1,786.1 57.
Slide 23: Appendix | GAAP to Non-GAAP Reconciliation
Appendix | GAAP to Non-GAAP Reconciliation (1) Restructuring and other consists of: Twelve Months Ended December 31, December 31, 2021 2020 Employee severance $ 1.5 $ 2.3 Acquisition related expenses and compensation 0.5 2.5 Contingent consideration fair value adjustment (7.2) (23.3) Other 6.5 5.2 $
Slide 24: Appendix | GAAP to Non-GAAP Reconciliation
Appendix | GAAP to Non-GAAP Reconciliation Q1'21 Q4'21 Q1'22 Q2'22 Low Guidance Q2'22 High Guidance $'s % of sales $'s % of sales $'s % of sales $'s % of sales $'s % of sales GAAP Operating Expenses $229 29% $271 31% $269 36% $269 34% $272 31% Intangible Asset Amortization -$6 -1% -$5 -1% -$5 -1% -$
Slide 25: 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 26: Appendix | GAAP to Non-GAAP Reconciliation
Appendix | GAAP to Non-GAAP Reconciliation Old 2024 Model Range 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
Slide 27: Appendix | GAAP to Non-GAAP Reconciliation
Appendix | GAAP to Non-GAAP Reconciliation New 2024 Model Range FY 2024 Low FY 2024 Mid FY 2024 High 2024 Estimated GAAP Diluted EPS $ 6.90 $ 7.90 $ 8.90 Add Back Intangible Asset Amortization $ 0.10 $ 0.10 $ 0.10 2024 Estimated Non-GAAP Diluted EPS $ 7.00 $ 8.00 $ 9.00 27