Slide 1: Financial Results for Q2 2021
Financial Results for Q2 2021 July 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: Q2'21 Summary
Q2’21 Summary 29% Sales Growth and 44% Non-GAAP Earnings Per Share Growth vs Q2’20 $1,200M $2.00 $2.0B $3.50 Sales EPS $1,000M $1.9B $3.00 $1.50 $3.02 $1.5B $2.50 $800M $1.5B $2.34 $2.00 $600M $1.00 $1.91 $1.0B $1,086M $1.1B $1.50 $400M $839M $782M $1.33 $1.11 $1.20 $1.00 $0.50 $0.5B $200M $0.50 $M
Slide 6: 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 7: Q2'21 Highlights
Q2’21 Highlights – Q2 sales and non-GAAP EPS up 29% and 44% respectively vs Q2’20 – 1H’21 sales grew 21% and non-GAAP EPS 29% vs record 1H’20 levels – Test revenue grew 27% vs Q2’20 on broad based demand in SemiTest and System Test – Estimated SOC TAM range for 2021 increased: now $4.3B to $4.7B; Me
Slide 8: Second Quarter 2021 Financial Results and Third Quarter 2021 Guidance
Second Quarter 2021 Financial Results and Third Quarter 2021 Guidance Sanjay Mehta, Teradyne Vice President and Chief Financial Officer 8
Slide 9: Q2'21 Non-GAAP Results
Q2’21 Non-GAAP Results $s in millions, except EPS Q2’20 Actual(1) Q1’21 Actual(1) Q2’21 Actual(1) Sales $839M $782M $1,086M Gross Margin 56.2% $472M 59.1% $462M 59.6% $647M R&D 11.2% $94M 12.8% $100M 10.1% $110M SG&A 13.5% $113M 16.6% $130M 12.9% $140M OPEX 24.7% $207M 29.5% $230M 23.0% $250M Operat
Slide 10: Q2'21 Segment Summary
Q2’21 Segment Summary Semiconductor Industrial System Test Wireless Test Test Automation Quarter Sales 2nd $834M $105M $55M $92M Sales up 27% from Q2’20, Sales up 46% from Q2’20, Sales up 12% from Q2’20, 43% from Q2’19 33% from Q2’19 Sales up 57% from Q2’20, 122% from Q2’19 23% from Q2’19 Q2 ’21 Key
Slide 11: Balance Sheet & Capital Return
Balance Sheet & Capital Return Q2’20 Q1’21 Q2’21 Actual Actual Actual Cash and Marketable Securities $1,065M $1,425M $1,418M Inventory $206M $262M $226M DSO 75 Days 70 Days 73 Days Capital Additions $47M $39M $35M Depreciation and Amortization(1) $44M $46M $42M Free Cash Flow(3) $176M ($1M) $172M Bu
Slide 12: Q3'21 Non-GAAP Guidance
Q3’21 Non-GAAP Guidance Q2’21 Actual(1) Q3’21 Guidance(1) $s in millions, except EPS Sales $1,086M $880M - $960M Gross Margin 60% 59% - 60% OPEX 23% 27% - 29% Operating Profit 37% 30% - 33% Net Interest & Other Income/(Expense) ($1M) ($1M) Effective Tax Rate 14.75% 14.75% EPS $1.91 $1.29 - $1.55 Dil
Slide 13: Q2'21 Summary
Q2’21 Summary – Q2 sales and non-GAAP EPS up 29% and 44% respectively vs Q2’20 – Non-GAAP Gross margin of 59.6% vs 56.2% in Q2’20, 36.5% Non-GAAP operating margin vs 31.5% in Q2’20 – Test revenue grew 27% on broad based demand in SemiTest and System Test – Estimated SOC TAM range for 2021 increased:
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 1H’21 Cumulative Buybacks $300M $146M $200M $823M $500M $88M $197M(1) $2,255M(1) Dividends $51M $49M $55M $67M $61M $66M $33M $383M Acquisitions $283M $15M $1M $194M $115M $9M $12M $629M Total $633M $210M $257M $1,085M $676M $164M
Slide 16: Teradyne Non-GAAP Earnings Model
Teradyne Non-GAAP Earnings Model Financial Model '19/'20 ’19/’20 Sales Mix 2019 2020 Avg 2022E (Old Model) 2024E (New Model) 11% TER Revenue ($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: 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 4, % of Net April 4, % of Net June 28, % of Net 2021 Revenues 2021 Revenues 2020 Revenues Net revenues $ 1,085.7 $ 781.6 $ 838.7 Gross profit GAAP $ 647.0 59
Slide 19: GAAP to Non-GAAP Reconciliation
Appendix | GAAP to Non-GAAP Reconciliation (1) Restructuring and other consists of: Quarter Ended July 4, April 4, June 28, 2021 2021 2020 Employee severance $ 0.4 $ 0.2 $ - Acquisition related expenses and compensation 0.3 (0.2) 3.1 Contingent consideration fair value adjustment - (7.2) 29.3 Contra
Slide 20: GAAP to Non-GAAP Reconciliation: Six Months
Appendix | GAAP to Non-GAAP Reconciliation Six Months Ended July 4, % of Net June 28, % of Net 2021 Revenues 2020 Revenues Net Revenues $ 1,867.3 $ 1,543.0 Gross profit GAAP $ 1,108.6 59.4% $ 877.0 56.8% Inventory step-up - - 0.2 0.0% Gross profit non-GAAP $ 1,108.6 59.4% $ 877.2 56.9% Income from o
Slide 21: GAAP to Non-GAAP Reconciliation
Appendix | GAAP to Non-GAAP Reconciliation (1) Restructuring and other consists of: Six Months Ended July 4, June 28, 2021 2020 Contingent consideration fair value adjustment $ (7.2) $ 19.2 Employee severance 0.6 0.8 Acquisition related expenses and compensation - 4.5 Contract termination settlement
Slide 22: GAAP to Non-GAAP Reconciliation
Appendix | GAAP to Non-GAAP Reconciliation Six M onths E nde d June 28, % of Net June 30, % of Net 2020 Revenues 2019 Revenues Net Revenues $ 1,543.0 $ 1,058.3 Gross profit GAAP $ 877.0 56.8% $ 611.6 57.8% Inventory step-up 0.2 0.0% 0.4 0.0% Gross profit non-GAAP $ 877.2 56.9% $ 612.0 57.8% Income f
Slide 23: GAAP to Non-GAAP Reconciliation
Appendix | GAAP to Non-GAAP Reconciliation Q2'20 Q1'21 Q2'21 Q3'21 Low Guidance Q3'21 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 $254 30% $229 29% $258 24% $261 30% $265 28% Intangible Asset Amortization -$9 -1% -$6 -1% -$5 0% -$8
Slide 24: 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 25: GAAP to Non-GAAP Reconciliation
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: GAAP to Non-GAAP Reconciliation
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: 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.