Teradyne, Inc. · NASDAQ:TER
Teradyne — Q1 2021 Earnings Presentation
25 slides from Teradyne's earnings presentation, Apr 28, 2021
Slide 1: Financial Results for Q1 2021
Financial Results for Q1 2021 April 28, 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 The global pandemic of the novel strain of the coronavirus (COVID-19) has resulted in authorities implementing numerous measures to try to contain the virus, such as travel bans and restrictions, quarantines, shelter in place orders, and shutdowns. These measures have impact
Slide 4: Business Update and Outlook
Business Update and Outlook Mark Jagiela, Teradyne President and CEO 4
Slide 5: Q1'21 Summary
Q1’21 Summary Q1’21 Test and Industrial Automation Segment Revenue Grew Year on Year Sales of $782M, Non-GAAP EPS of $1.11 $800M 60% $1.20 $700M 58% $1.00 $0.80 $600M 56% $782M 59% 59% $0.60 $759M 54% $1.10 $1.11 $500M $704M 58% $1.00 56% 56% $0.40 $400M 52% $0.20 50% $300M $0.00 Q1'20 Q2'20 Q3'20 Q
Slide 6: Semiconductor Test Markets are Growing
Semiconductor Test Markets are Growing (1) Semiconductor SOC Memory Test $4,500 - $4,000 ~12% SOC market powered8 by CAGR % $3,500 unit growth, complexity, new technology $3,000 adoption $2,500 Memory test driven by bit growth, diversity, $2,000 higher bandwidth $1,500 ~19% CAGR $1,000 (2) 2021 Mark
Slide 7: Q1'21 Highlights
Q1’21 Highlights – Q1 sales and non-GAAP EPS up 11% vs Q1’20 – Test revenue grew 9% on broad based demand in SemiTest and System Test – Unit growth and device complexity driving estimated SOC TAM range to $4.0B to $4.4B and Memory TAM range to $900M to $1.1B in 2021, up 16% and 5% from 2020 at mid-p
Slide 8: First Quarter 2021 Financial Results and Second Quarter 2021 Guidance
First Quarter 2021 Financial Results and Second Quarter 2021 Guidance Sanjay Mehta, Teradyne Vice President and Chief Financial Officer 8
Slide 9: Q1'21 Non-GAAP Results
Q1’21 Non-GAAP Results $s in millions, except EPS Q1’20 Actual(1) Q4’20 Actual(1) Q1’21 Actual(1) Sales $704M $759M $782M Gross Margin 57.6% $406M 59.3% $450M 59.1% $462M R&D 12.1% $85M 13.2% $100M 12.8% $100M SG&A 15.8% $111M 16.3% $124M 16.6% $130M OPEX 27.9% $197M 29.5% $224M 29.5% $230M Operatin
Slide 10: Q1'21 Segment Summary and Key Highlights
Q1’21 Segment Summary Semiconductor Industrial System Test Wireless Test Test Automation Quarter Sales $528M $133M $41M 1st $80M Sales up 9% from Q1’20 Sales up 14% from Q1’20 Sales up 33% from Q1’20 Sales down 6% from record Q1’20 Q1’21 Key Highlights Compute, Industrial, and Storage Test grew 26%
Slide 11: Balance Sheet & Capital Return
Balance Sheet & Capital Return Q1’20 Q4’20 Q1’21 Actual Actual Actual Cash and Marketable Securities $905M $1,554M $1,425M Inventory $183M $222M $262M DSO 62 Days 62 Days 70 Days Acquisition Earn-out Accruals(1) $20M $7M $0M Capital Additions $37M $38M $39M Depreciation and Amortization(2) $42M $44M
Slide 12: Q2'21 Non-GAAP Guidance
Q2’21 Non-GAAP Guidance Q1’21 Actual(1) Q2’21 Guidance(1) $s in millions, except EPS Sales $782M $1,010M - $1,090M Gross Margin 59.1% 58% OPEX 29.5% 23% - 25% Operating Profit 29.6% 33% - 35% Net Interest & Other Income/(Expense) ($1M) ($2M) Effective Tax Rate 14.75% 14.75% EPS $1.11 $1.62 - $1.83 D
Slide 13: Q1'21 Summary
Q1’21 Summary – Q1 sales and non-GAAP EPS up 11% vs Q1’20 to a new Q1 company record, – Test shipments grew 9% on broad based demand in SemiTest and System Test – Unit growth and device complexity driving estimated SOC TAM to $4.0B to $4.4B and Memory TAM to $900M to $1.1B in 2021, up 16% and 5% fro
Slide 14: Supplemental Information
Supplemental Information 14
Slide 15: History of Balanced Capital Allocation
History of Balanced Capital Allocation 2015 2016 2017 2018 2019 2020 Q1’21 Cumulative Buybacks $300M $146M $200M $823M $500M $88M $45M(1) $2,103M(1) Dividends $51M $49M $55M $67M $61M $66M $17M $367M Acquisitions $283M $15M $1M $194M $115M $9M $0M $617M Total $633M $210M $257M $1,085M $676M $164M $6
Slide 16: Teradyne Non-GAAP Earnings Model
Teradyne Non-GAAP Earnings Model Financial Model '19/'20 ’19/’20 Sales Mix 2019 2020 Avg 2022E (Old Model) 2024E (New Model) 11% TER Revenue ($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: 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: 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 April 4, % of Net December 31, % of Net March 29, % of Net 2021 Revenues 2020 Revenues 2020 Revenues Net revenues $ 781.6 $ 759.0 $ 704.4 Gross profit GAAP $ 461.
Slide 19: Restructuring and Other Detail
Appendix | GAAP to Non-GAAP Reconciliation (1) Restructuring and other consists of: Quarter Ended April 4, December 31, March 29, 2021 2020 2020 Contingent consideration fair value adjustment $ (7.2) $ (15.3) $ (10.0) Acquisition related expenses and compensation (0.2) (0.9) 1.4 Employee severance 0
Slide 20: 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 September 27, % of Net June 28, % of Net September 29, % of Net 2020 Revenues 2020 Revenues 2019 Revenues Net revenues $ 819.5 $ 838.7 $ 582.0 Gross profit GAAP $
Slide 21: GAAP to Non-GAAP Operating Expenses and Tax
Appendix | GAAP to Non-GAAP Reconciliation Q1'20 Q4'20 Q1'21 Q2'21 Low Guidance Q2'21 High Guidance $'s % of sales $'s % of sales $'s % of sales $'s % of sales $'s % of sales GAAP Operating Expenses $199 28% $216 28% $229 29% $261 26% $264 24% Intangible Asset Amortization -$10 -1% -$6 -1% -$6 -1% -
Slide 22: GAAP to Non-GAAP SG&A Expense
Appendix | GAAP to Non-GAAP Reconciliation Q4'20 Q3'20 Q4'19 FY2020 FY2019 GAAP SG&A expense 124 116 117 465 437 Exclude stock compensation expense related to equity modification (1) - - (1) (2) Non-GAAP SG&A expense 124 116 117 464 435 22
Slide 23: Free Cash Flow Definition
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: FY2024 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 25: FY2022 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