Teradyne, Inc. · NASDAQ:TER
Teradyne — Q4 2021 Earnings Presentation
32 slides from Teradyne's earnings presentation, Jan 27, 2022
Slide 1: Financial Results for Q4 and Full Year 2021
Financial Results for Q4 and Full Year 2021 January 27, 2022
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, supply chain impact on the business, customer sales expectations, the pa
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 measuresto try to contain the virus, such as travel bans and restrictions, quarantines, government vaccination mandates and other government regulations.
Slide 4: Business Update and Outlook
Business Update and Outlook Mark Jagiela, Teradyne President and CEO 4
Slide 5: Q4'21 and 2021 Summary
Q4’21 and 2021 Summary All Segments’ Revenue Grew Year on Year 2021 Sales of $3,703M, Non-GAAP EPS of $5.98 2019 2020 2021 $4.0B $7.00 $1,200 Sales EPS $3.5B $3.7B $6.00 $1,000 $3.0B $5.98 $3.1B $5.00 $800 $2.5B $4.62 $4.00 $600 $2.0B $2.3B $2.1B $2.1B $3.00 $1.5B $400 $2.86 $2.00 $1.0B $2.34 $2.37
Slide 6: Semiconductor Test Markets are Growing
Semiconductor Test Markets are Growing (1) Semiconductor SOC Memory Test $6,000 - 12% 8%by SOC market powered $5,000 CAGR unit growth, complexity, new technology $4,000 adoption Memory test driven by $3,000 bit growth, diversity, higher bandwidth $2,000 9% CAGR (2) 2022 Market Sizes $1,000 $0 (2) $1
Slide 7: 2021 Highlights & 2022 Outlook
2021 Highlights & 2022 Outlook • The Q4 Headlines: – Company revenue up 17%, Test +16%, IA +23% compared with Q4’20 – Test: Broad based strength with SemiTest, Storage Test, Wireless Test all growing double digits from Q4’20 – IA: Universal Robots and MiR expanded the range of tasks served and grew
Slide 8: Fourth Quarter and Full Year 2021 Financial Results, Earnings Model Update, Q1 2022 Guidance
Fourth Quarter and Full Year 2021 Financial Results, Earnings Model Update, and First Quarter 2022 Guidance Sanjay Mehta, Teradyne Vice President and Chief Financial Officer 8
Slide 9: Q4'21 Non-GAAP Results
Q4’21 Non-GAAP Results $s in millions, except EPS Q4’20 Actual(1) Q3’21 Actual(1) Q4’21 Actual(1) Sales $759M $951M $885M Gross Margin 59.3% $450M 60.1% $571M 59.5% $527M R&D 13.3% $101M 11.3% $107M 12.4% $110M SG&A 16.3% $123M 14.2% $135M 16.1% $143M OPEX 29.5% $224M 25.5% $242M 28.6% $253M Operati
Slide 10: Q4'21 Segment Summary
Q4’21 Segment Summary Semiconductor Industrial System Test Wireless Test Automation Test Quarter Sales $592M $127M $52M $113M 4th Sales up 13% vs Q4’20 Sales up 23% vs Q4’20 Sales up 31% vs Q4’20 Sales up 23% vs Q4’20 2021 Q4 Key Highlights Mobile applications Defense/Aerospace Record Q4 sales on UR
Slide 11: Q1'22 Non-GAAP Guidance
Q1’22 Non-GAAP Guidance Q4’21 Actual(1) Q1’22 Guidance(1) $s in millions, except EPS Sales $885M $700M - $770M Gross Margin 59.5% 58.5% - 59.5% OPEX 29% 36% - 33% Operating Profit 31% 22% - 26% Effective Tax Rate 13.6% 15.0% EPS $1.37 $0.76 - $0.98 Diluted Shares 175M 175M 11 (1) See attached append
Slide 12: Teradyne Non-GAAP Earnings Model
Teradyne Non-GAAP Earnings Model Financial Model '19/'20 '20/'21 Avg Avg 2024E (Old Model) 2024E (New Model) ‘20/’21 Sales Mix 10% (2) TER Revenue ($M) $2,708 $3,412 $3,500 $4,250 $4,600 $5,250 + 27% =$3,412M Growth off '19/'20 7% 12% 14% 18% Gross Margin % 57% 58% 58% 59% 59% 60% 90% Automated Test
Slide 13: 2024 Bottom-Up Earnings Model In-Line with Recent Growth Trends
2024 Bottom-Up Earnings Model In-Line with Recent Growth Trends (1) Revenue Non-GAAP EPS $6.0B $10.00 $9.00 $5.0B $8.00 $7.00 $4.0B $6.00 $3.0B $3.7B $5.98 $5.00 $3.1B $4.00 $4.62 $2.0B $2.3B $3.00 $2.1B $2.1B $1.8B $2.00 $2.86 $1.0B $2.37 $2.34 $1.00 $1.51 $0.0B $- 2016 2017 2018 2019 2020 2021 202
Slide 14: 2021 Highlights & 2022 Outlook Summary
2021 Highlights & 2022 Outlook Summary • The Q4 Headlines: – Company revenue up 17%, Test +16%, IA +23% compared with Q4’20 – Test: Broad based strength with SemiTest, Storage Test, Wireless Test all growing double digits from Q4’20 – IA: Universal Robots and MiR expanded the range of tasks served a
Slide 15: Supplemental Information
Supplemental Information 15
Slide 16: Annual Non-GAAP Results
Annual Non-GAAP Results $s in millions, except EPS 2020(1) 2021(1) Sales $3,121M $3,703M Gross Margin 57% $1,786M 60% $2,207M R&D 12% $375M 12% $428M SG&A 15% $464M 15% $548M OPEX 26% $839M 26% $975M Operating Profit 30% $947M 33% $1,231M Income Taxes (& effective tax rate) 15.25% $144M 14.5% $178M
Slide 17: Balance Sheet & Capital Return
Balance Sheet & Capital Return Q4’20 Q3’21 Q4’21 Actual Actual Actual Cash and Marketable Securities $1,554M $1,450M $1,500M Inventory $222M $224M $243M DSO 62 Days 57 Days 55 Days Capital Additions $38M $29M $29M Depreciation and Amortization(1) $44M $42M $41M Free Cash Flow(2) $222M $493M $302M Bu
Slide 18: History of Balanced Capital Allocation
History of Balanced Capital Allocation • Since 2015, 67.1M shares repurchased at an average price of ~$40 per share ($M) 2015 2016 2017 2018 2019 2020 2021 Cumulative Buybacks 300 146 200 823 500 88 600 2,658 Dividends 51 49 55 67 61 66 66 416 Acquisitions 283 15 1 194 115 9 12 629 Total 633 210 257
Slide 19: 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 20: Appendix | GAAP to Non-GAAP Reconciliation
Appendix | GAAP to Non-GAAP Reconciliation Quarter Ended December 31, % of Net October 3, % of Net December 31, % of Net 2021 Revenues 2021 Revenues 2020 Revenues Net revenues $ 885.0 $ 950.5 $ 759.0 Gross profit GAAP $ 527.0 59.5% $ 571.0 60.1% $ 449.8 59.3% Gross profit non-GAAP $ 527.0 59.5% $ 57
Slide 21: Appendix | GAAP to Non-GAAP Reconciliation
Appendix | GAAP to Non-GAAP Reconciliation (1) Restructuring and other consists of: Quarter Ended December 31, October 3, December 31, 2021 2021 2020 Employee severance $ 0.3 $ 0.6 $ 1.1 Acquisition related expenses and compensation 0.2 0.3 (0.9) Contingent consideration fair value adjustment - - (1
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 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: 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 24: 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 25: 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 26: Appendix | GAAP to Non-GAAP Reconciliation
Appendix | GAAP to Non-GAAP Reconciliation T welve Months Ended December 31, % of Net December 31, % of Net 2019 Revenues 2018 Revenues Net Revenues $ 2,295.0 $ 2,100.8 Gross profit GAAP $ 1,339.8 58.4% $ 1,220.4 58.1% Inventory step-up 0.4 0.0% 0.4 0.0% Gross profit non-GAAP $ 1,340.2 58.4% $ 1,220
Slide 27: Appendix | GAAP to Non-GAAP Reconciliation
Appendix | GAAP to Non-GAAP Reconciliation T we lve M onths E nde d December 31, % of Net December 31, % of Net 2017 Revenues 2016 Revenues Net Revenues $ 2,136.6 $ 1,753.3 Gross profit - GAAP $ 1,223.9 57.3% $ 959.6 54.7% Pension mark-to-market adjustment (1) (2.8) -0.1% (1.0) -0.1% Gross profit -
Slide 28: Appendix | GAAP to Non-GAAP Reconciliation
Appendix | GAAP to Non-GAAP Reconciliation Q4'20 Q3'21 Q4'21 Q1'22 Low Guidance Q1'22 High Guidance $'s % of sales $'s % of sales $'s % of sales $'s % of sales $'s % of sales GAAP Operating Expenses $216 28% $249 26% $263 30% $259 37% $262 34% Intangible Asset Amortization -$6 -1% -$5 -1% -$5 -1% -$
Slide 29: Appendix | GAAP to Non-GAAP Reconciliation
Appendix | GAAP to Non-GAAP Reconciliation Q4'21 Q3'21 Q4'20 FY2021 FY2020 GAAP SG&A expense 143 135 124 548 465 Exclude stock compensation related to equity modification - - (1) - (1) Non-GAAP SG&A expense 143 135 123 548 464 2020 2021 $'s % of sales $'s % of sales GAAP Operating Expenses $857 27%
Slide 30: 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 31: 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 32: 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 32