Teradyne, Inc. · NASDAQ:TER
Teradyne — Q3 2020 Earnings Presentation
24 slides from Teradyne's earnings presentation, Oct 21, 2020
Slide 1: Financial Results for Q3 2020
Financial Results for Q3 2020 October 21, 2020
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 outbreak, 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 outbreak of the recent 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
Slide 4: Business Update and Outlook
Business Update and Outlook Mark Jagiela, Teradyne President and CEO 4
Slide 5: Q3'20 Summary
Q3’20 Summary 41% Sales Growth and 53% Non-GAAP Earnings Per Share Growth vs Q3’19 $900M $1.40 $2.5B $4.00 Sales EPS $800M $1.20 $2.4B $2.0B $3.52 $3.00 $700M $1.00 $1.5B $1.6B $600M $0.80 $1.6B $2.00 $839M $819M $1.33 $500M $0.60 $1.18 $1.0B $1.97 $1.74 $400M $582M $0.40 $0.77 $1.00 $0.5B $300M $0.
Slide 6: October 2020 Summary
October 2020 Summary • Semiconductor and System Test sales remained strong in Q3 with continued short lead time Semiconductor Test demand. • Industrial Automation (IA) demand improved from trough levels in Q2; now at 2019 quarterly levels. • Teradyne driving improved earnings on growing test intensi
Slide 7: Third Quarter 2020 Financial Results and Fourth Quarter 2020 Guidance
Third Quarter 2020 Financial Results and Fourth Quarter 2020 Guidance Sanjay Mehta, Teradyne Vice President and Chief Financial Officer 7
Slide 8: Q3'20 Non-GAAP Results
Q3’20 Non-GAAP Results $s in millions, except Q3’19 Actual(1) Q2’20 Actual(1) Q3’20 Actual(1) EPS Sales $582M $839M $819M Gross Margin 59.3% $345M 56.2% $472M 56.0% $459M R&D 13.4% $78M 11.2% $94M 11.6% $95M SG&A 18.4% $107M 13.5% $113M 14.1% $116M OPEX 31.8% $185M 24.7% $207M 25.7% $211M Operating
Slide 9: Balance Sheet & Capital Return
Balance Sheet & Capital Return Q3’19 Q2’20 Q3’20 Actual Actual Actual Cash and Marketable $1,040M $1,062M $1,341M Securities Inventory $178M $206M $191M DSO 56 Days 75 Days 65 Days Acquisition Earn-out Liability(1) $18M $50M $23M Capital Additions $37M $47M $63M Depreciation and $40M $44M $42M Amort
Slide 10: Q3'20 Segment Summary
Q3’20 Segment Summary Semiconductor Industrial System Test Wireless Test Automation Test Quarter Sales $592M $118M $41M $69M 3rd Sales up 49% vs Q3’19 Sales up 61% vs Q3’19 Sales down 4% vs Q3’19 Sales flat with Q3’19 Mobility and compute Record Storage Test Wi-Fi 6,6E demand IA sales up 17% from Q2
Slide 11: Q4'20 Non-GAAP Guidance
Q4’20 Non-GAAP Guidance Q3’20 Q4’20 $s in millions, except EPS Actual(1) Guidance(1) Sales $819M $680M - $740M Gross Margin 56% 58% - 59% OPEX 26% 31% - 29% Operating Profit 30% 28% - 30% Net Interest & Other Income/(Expense) $0M ($2M) Effective Tax Rate 17.4% 15.5% EPS $1.18 $0.90 - $1.06 Diluted S
Slide 12: October 2020 Summary
October 2020 Summary • Semiconductor and System Test sales remained strong in Q3 with continued short lead time Semiconductor Test demand. • Industrial Automation (IA) demand improved from trough levels in Q2; now at 2019 quarterly levels. • Teradyne driving improved earnings on growing test intensi
Slide 13: Supplemental Information
Supplemental Information 13
Slide 14: 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 15: 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 16: Restructuring and other detail
Appendix | GAAP to Non-GAAP Reconciliation (1) Restructuring and other consists of: Quarter Ended September 27, June 28, September 29, 2020 2020 2019 Contingent consideration fair value adjustment $ (27.2) $ 29.3 $ (7.8) Acquisition related expenses and compensation (1.1) 3.1 0.5 Employee severance
Slide 17: Nine Months 2020 and 2019 Reconciliation
Appendix | GAAP to Non-GAAP Reconciliation Nine Months Ended September 27, % of Net September 29, % of Net 2020 Revenues 2019 Revenues Net Revenues $ 2,362.5 $ 1,640.3 Gross profit GAAP $ 1,336.0 56.6% $ 956.6 58.3% Inventory step-up 0.4 0.0% 0.4 0.0% Gross profit non-GAAP $ 1,336.4 56.6% $ 957.0 58
Slide 18: Restructuring and other, nine months
Appendix | GAAP to Non-GAAP Reconciliation (1) Restructuring and other consists of: Nine Months Ended September 27, September 29, 2020 2019 Contingent consideration fair value adjustment $ (8.0) $ (16.5) Contract termination settlement fee 4.0 - Acquisition related expenses and compensation 3.4 2.3
Slide 19: Nine Months 2019 and 2018 Reconciliation
Appendix | GAAP to Non-GAAP Reconciliation N ine M onths E nde d September 29, % of Net September 30, % of Net 2019 Revenues 2018 Revenues Net Revenues $ 1,640.3 $ 1,581.2 Gross profit GAAP $ 956.6 58.3% $ 910.9 57.6% Inventory step-up 0.4 0.0% 0.4 0.0% Gross profit non-GAAP $ 957.0 58.3% $ 911.3 57
Slide 20: Restructuring and other, nine months 2019 and 2018
Appendix | GAAP to Non-GAAP Reconciliation (1) For the nine months ended September 29, 2019, selling and administrative expenses include an equity charge for the modification of Teradyne's retired CFO's outstanding equity awards to allow continued vesting and maintain the original term in connection
Slide 21: GAAP to Non-GAAP Earnings Reconciliation, Q1 2020
Appendix | GAAP to Non-GAAP Reconciliation GAAP to N on-GAAP E arnings Re conciliation (In millions, except per share amounts) Q uarte r E nde d March 29, % of Net 2020 Revenues Net revenues $ 704.4 Gross profit GAAP and non-GAAP $ 405.6 57.6% Inventory step-up 0.1 0.0% Gross profit non-GAAP $ 405.7
Slide 22: Restructuring and other, Q1 2020
Appendix | GAAP to Non-GAAP Reconciliation (1) Restructuring and other consists of: Q uarte r E nde d March 29, December 31, March 31, 2020 2019 2019 Contingent consideration fair value adjustment $ (10.0) $ (2.8) $ 3.0 Acquisition related expenses and compensation 1.7 0.2 1.3 Employee severance 0.7
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: Operating Expenses and Tax Reconciliation
Appendix | GAAP to Non-GAAP Reconciliation Q3'19 Q2'20 Q3'20 Q4'20 Low Guidance Q4'20 High Guidance $'s % of sales $'s % of sales $'s % of sales $'s % of sales $'s % of sales GAAP Operating Expenses $190 33% $254 30% $189 23% $218 32% $221 30% Intangible Asset Amortization -$10 -2% -$9 -1% -$6 -1% -