Teradyne, Inc. · NASDAQ:TER
Teradyne — Q1 2023 Earnings Presentation
26 slides from Teradyne's earnings presentation, Apr 27, 2023
Slide 1: Financial Results for Q1 2023
Financial Results for Q1 2023 April 27, 2023
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, results of operations, market conditions, earnings per share, the impact of supply chain conditions on the business, customer sales expectations, the payment of a quarterly
Slide 3: Safe Harbor (page 2 of 2)
SAFE HARBOR (page 2 of 2) The Company also has determined that the restrictions on the export of certain US origin components and technology for use in the development and production in China of certain semiconductor manufacturing equipment impact its manufacturing and development operations in Chin
Slide 4: Business Update and Outlook
Business Update and Outlook Greg Smith, Teradyne President and CEO 4
Slide 5: Q1'23 Summary
Q1’23 Summary Sales of $618M, Gross Margins of 57.7%, Non-GAAP EPS of $0.55 Q1’23 Guidance Range $1,000M 65% $1.40 $800M 60% $1.20 $1.00 $600M $550M - 55% 55% - 56% $630M $0.80 $400M 50% 60.2% $0.60 $755M $732M 57.4% 57.7% $0.98 $0.92 $0.28 - $618M $0.40 45% $0.52 $200M $0.55 $0.20 40% $0.00 $M Q1'2
Slide 6: Q1'23 Summary
Q1‘23 Summary • Q1’23 Summary: – Sales above the mid-point of our guidance range with earnings above the high guide on improved gross margins – Auto and Industrial related demand in SOC test stronger than expected – Mobility & Compute related demand in SOC test remains weak with lower than normal ut
Slide 7: First Quarter 2023 Financial Results and Second Quarter 2023 Guidance
First Quarter 2023 Financial Results and Second Quarter 2023 Guidance Sanjay Mehta, Teradyne Vice President and Chief Financial Officer 7
Slide 8: Q1'23 Non-GAAP Results
Q1’23 Non-GAAP Results $s in millions, except EPS Q1’22 Actual(1) Q4’22 Actual(1) Q1’23 Actual(1) Sales $755M $732M $618M Gross Margin 60.2% $455M 57.4% $420M 57.7% $356M R&D 14.3% $108M 14.9% $109M 17.1% $106M SG&A 18.6% $140M 19.5% $143M 23.5% $145M OPEX 32.9% $248M 34.4% $252M 40.6% $251M Operati
Slide 9: Q1'23 Segment Summary
Q1’23 Segment Summary Semiconductor System Test Wireless Test Robotics Test 1st Quarter $415M $75M $39M $89M Sales Sales down 14% vs Q1’22 Sales down 37% vs Q1’22 Sales down 25% vs Q1’22 Sales down 14% vs Q1’22 on Mobility and Compute due to lower consumer PC weakening industrial related SOC demand
Slide 10: Balance Sheet & Capital Return
Balance Sheet & Capital Return Q1’22 Q4’22 Q1’23 Actual Actual Actual Cash and Marketable Securities $1,203M $1,005M $859M Inventory $259M $325M $352M DSO 67 Days 60 Days 68 Days Capital Additions $44M $35M $41M Depreciation and Amortization(1) $41M $39M $46M Free Cash Flow(2) ($37M) $149M ($22M) Bu
Slide 11: Q2'23 Non-GAAP Guidance
Q2’23 Non-GAAP Guidance $s in millions, except EPS Q1’23 Actual(1) Q2’23 Guidance(1) Sales $618M $625M - $685M Gross Margin 57.7% 57% - 58% OPEX 40.6% 40% - 37% Operating Profit 17.1% 17% - 21% Effective Tax Rate 16.75% 17.0% EPS $0.55 $0.55 - $0.74 Diluted Shares 165M 164M 11 (1) See attached appen
Slide 12: Q1'23 Summary
Q1‘23 Summary • Q1’23 Summary: – Sales above the mid-point of our guidance range with earnings above the high guide on improved gross margins – Auto and Industrial related demand in SOC test stronger than expected – Mobility & Compute related demand in SOC test remains weak with lower than normal ut
Slide 13: Supplemental Information
Supplemental Information 13
Slide 14: Teradyne Non-GAAP Earnings Model
Teradyne Non-GAAP Earnings Model Financial Model (1)(2) 2022 2026E (New Model) 2022 Sales Mix 2026E Sales Mix(3) TER Revenue ($M) $3,155 $4,500 $5,550 13% =$3,155M 19% =$5,025M(3) Growth off 2022 9% 15% Gross Margin % 59% 59% 60% OPEX % 32% 28% 26% 87% 81% Operating Profit % 28% 31% 34% Automated Ro
Slide 15: History of Capital Allocation
History of Capital Allocation • Since 2016, 59.7M shares repurchased at an average price of ~$54 per share 2016 2017 2018 2019 2020 2021 2022 Q1’23 Cumulative ($M) Buybacks $146M $200M $823M $500M $88M $600M $752M $93M $3,203M Dividends $49M $55M $67M $61M $66M $66M $70M $17M $452M Acquisitions $15M
Slide 16: Semiconductor Test Market Growth Trends Are Favorable
Semiconductor Test Market Growth Trends Are Favorable Semiconductor (1) Test SOC Memory $6,000 SOC market powered by unit growth, complexity, $5,000 new technology 6% adoption CAGR $4,000 Memory test driven by bit growth, diversity, higher bandwidth $3,000 $2,000 12% (2) CAGR 2023 Market Sizes $1,00
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 2, % of Net December 31, % of Net April 3, % of Net 2023 Revenues 2022 Revenues 2022 Revenues Net revenues $ 617.5 $ 731.8 $ 755.4 Gross profit GAAP and non
Slide 19: Appendix | GAAP to Non-GAAP Reconciliation
Appendix | GAAP to Non-GAAP Reconciliation 19
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 December 31, % of Net October 2, % of Net December 31, % of Net 2022 Revenues 2022 Revenues 2021 Revenues Net revenues $ 731.8 $ 827.1 $ 885.0 Gross profit GAAP a
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 2, December 31, 2022 2022 2021 Employee severance $ 0.8 $ 1.2 $ 0.3 Gain on sale of asset (3.4) - - Litigation settlement - - 12.0 Acquisition related expenses and compensation - -
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 2022 Revenues 2021 Revenues Net Revenues $ 3,155.0 $ 3,702.9 Gross profit GAAP and non-GAAP $ 1,867.2 59.2% $ 2,206.7 59.6% Income from operations - GAAP $ 831.9 26.4% $ 1,200.7 32.4% Restructu
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, 2022 2021 Litigation settlement $ 14.7 $ 12.0 Employee severance 2.9 1.5 Gain on sale of asset (3.4) - Contingent consideration fair value adjustment - (7.2) Other 3.0 3.
Slide 24: Appendix | GAAP to Non-GAAP Reconciliation
Appendix | GAAP to Non-GAAP Reconciliation Q1'22 Q4'22 Q1'23 Q2'23 Low Guidance Q2'23 High Guidance $'s % of sales $'s % of sales $'s % of sales $'s % of sales $'s % of sales GAAP Operating Expenses $269 36% $254 35% $264 43% $253 41% $256 37% Intangible Asset Amortization -$5 -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: New 2026 Model Range
Appendix | GAAP to Non-GAAP Reconciliation New 2026 Model Range FY 2026 Low FY 2026 Mid FY 2026 High 2026 Estimated GAAP Diluted EPS $ 7.49 $ 8.74 $ 9.99 Add Back Intangible Asset Amortization $ 0.01 $ 0.01 $ 0.01 2026 Estimated Non-GAAP Diluted EPS $ 7.50 $ 8.75 $ 10.00 26