Slide 1: Financial Results for Q2 2022
Financial Results for Q2 2022 July 27, 2022
Slide 2: Safe Harbor (page 1 of 2)
SAFE HARBOR (page 1 of 2) This release 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 chain con
Slide 3: Safe Harbor (page 2 of 2)
SAFE HARBOR (page 2 of 2) The COVID-19 pandemic has adversely impacted the Company’s results of operations, including increased costs company-wide and constraints within the Company’s supply chain. The Company cannot accurately estimate the amount of the impact on Teradyne’s 2022 financial results a
Slide 4: Business Update and Outlook
Business Update and Outlook Mark Jagiela, Teradyne CEO Greg Smith, Teradyne President 4
Slide 5: Q2'22 Summary
Q2’22 Summary Sales of $841M, Gross Margins of 60.2%, Non-GAAP EPS of $1.21 Test Businesses up 13% Quarter over Quarter $1,200M 65% $2.00 $1,000M 60% $1.50 $800M 55% $1.00 $1.91 $1,086M $600M 50% 59.6% 60.2% 60.2% $841M $1.21 $755M $0.50 $0.98 $400M 45% $200M $0.00 40% Q2'21 Q1'22 Q2'22 Q2'21 Q1'22
Slide 6: July 2022 Update
July 2022 Update • Q2 and 1H'22 results in line with prior guidance, 2H'22 outlook weakening • Complex market environment – Auto/Industrial/Memory Semiconductor test demand remains high with supply constraints limiting shipments – Weakening 2H'22 demand in Mobility/Compute Semiconductor and Wireless
Slide 7: Semiconductor Test Market Growth Trends Are Favorable
Semiconductor Test Market Growth Trends Are Favorable (1) Semiconductor SOC Memory Test $6,000 SOC market powered by $5,000 unit growth, complexity, 10% new technology CAGR adoption $4,000 Memory test driven by $3,000 bit growth, diversity, higher bandwidth $2,000 9% CAGR (2) 2022 Market Sizes $1,00
Slide 8: Second Quarter 2022 Financial Results and Third Quarter 2022 Guidance
Second Quarter 2022 Financial Results and Third Quarter 2022 Guidance Sanjay Mehta, Teradyne Vice President and Chief Financial Officer 8
Slide 9: Q2'22 Non-GAAP Results
Q2’22 Non-GAAP Results $s in millions, except EPS Q2’21 Actual(1) Q1’22 Actual(1) Q2’22 Actual(1) Sales $1,086M $755M $841M Gross Margin 59.6% $647M 60.2% $455M 60.2% $506M R&D 10.1% $110M 14.3% $108M 13.3% $112M SG&A 12.9% $140M 18.6% $140M 16.6% $140M OPEX 23.0% $250M 32.9% $248M 29.9% $251M Opera
Slide 10: Q2'22 Segment Summary and Key Highlights
Q2’22 Segment Summary Semiconductor Industrial System Test Wireless Test Test Automation 2nd Quarter Sales $541M $135M $64M $101M Sales down 35% vs Q2’21 Sales up 29% vs Q2’21 Sales up 16% vs Q2’21 Sales up 10% vs Q2’21 2022 Q2 Key Highlights Automotive and Industrial Storage Test shipments up Conti
Slide 11: Balance Sheet & Capital Return
Balance Sheet & Capital Return Q2’21 Q1’22 Q2’22 Actual Actual Actual Cash and Marketable Securities $1,418M $1,203M $894M Inventory $226M $259M $296M DSO 73 Days 67 Days 74 Days Capital Additions $35M $44M $46M Depreciation and Amortization(1) $42M $41M $39M Free Cash Flow(2) $172M ($37M) $70M Buyb
Slide 12: Q3'22 Non-GAAP Guidance
Q3’22 Non-GAAP Guidance $s in millions, except EPS Q2’22 Actual(1) Q3’22 Guidance(1) Sales $841M $760M - $840M Gross Margin 60.2% 58% - 59% OPEX 30% 34% - 31% Operating Profit 30% 24% - 28% Effective Tax Rate 16.9% 16.5% EPS $1.21 $0.90 - $1.16 Diluted Shares 169M 166M (1) See attached appendix for
Slide 13: July 2022 Update
July 2022 Update • Q2 and 1H'22 results in line with prior guidance, 2H'22 outlook weakening • Complex market environment – Auto/Industrial/Memory Semiconductor test demand remains high with supply constraints limiting shipments – Weakening 2H'22 demand in Mobility/Compute Semiconductor and Wireless
Slide 14: Supplemental Information
Supplemental Information 14
Slide 15: History of Balanced Capital Allocation
History of Balanced Capital Allocation • Since 2015, 72.1M shares repurchased at an average price of ~$44 per share 2015 2016 2017 2018 2019 2020 2021 1H'22 Cumulative ($M) Buybacks $300M $146M $200M $823M $500M $88M $600M $533M $3,191M Dividends $51M $49M $55M $67M $61M $66M $66M $35M $451M Acquisi
Slide 16: Teradyne Non-GAAP Earnings Model
Teradyne Non-GAAP Earnings Model Financial Model '19/'20 '20/'21 ‘20/’21 Sales Mix Avg Avg 2024E (Old Model) 2024E (New Model) 10% TER Revenue ($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: 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 July 3, % of Net April 3, % of Net July 4, % of Net 2022 Revenues 2022 Revenues 2021 Revenues Net revenues $ 840.8 $ 755.4 $ 1,085.7 Gross profit GAAP and non-GAA
Slide 19: GAAP to Non-GAAP Reconciliation
Appendix | GAAP to Non-GAAP Reconciliation (1) Restructuring and other consists of: Quarter Ended July 3, April 3, July 4, 2022 2022 2021 Employee severance $ 0.4 $ 0.6 $ 0.4 Litigation settlement - 14.7 - Acquisition related expenses and compensation - (0.2) 0.3 Other 1.7 0.7 1.8 $ 2.0 $ 15.7 $ 2.5
Slide 20: GAAP to Non-GAAP Reconciliation
Appendix | GAAP to Non-GAAP Reconciliation Q2'21 Q1'22 Q2'22 Q3'22 Low Guidance Q3'22 High Guidance #039;s % of sales #039;s % of sales #039;s % of sales #039;s % of sales #039;s % of sales GAAP Operating Expenses $258 24% $269 36% $258 31% $265 35% $269 32% Intangible Asset Amortization -$5 0% -$5 -1% -$5 -1% -$5
Slide 21: 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 22: 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 23: 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 24: 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 25: 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 26: Old 2024 Model Range
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: New 2024 Model Range
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