Slide 1: Financial Results for Q4 and Full Year 2022
Financial Results for Q4 and Full Year 2022 January 26, 2023
Slide 2: Safe Harbor (page 1 of 3)
SAFE HARBOR (page 1 of 3) This presentation 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 cha
Slide 3: Safe Harbor (page 2 of 3)
SAFE HARBOR (page 2 of 3) 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: Safe Harbor (page 3 of 3)
SAFE HARBOR (page 3 of 3) Important factors that could cause actual results, the 2026 earnings model, earnings per share, use of cash, dividend payments, repurchases of common stock, or payment of the senior convertible notes to differ materially from those presently expected include: conditions aff
Slide 5: Business Update and Outlook
Business Update and Outlook Mark Jagiela, Teradyne CEO Greg Smith, Teradyne President 4
Slide 6: Q4'22 and 2022 Summary
Q4’22 and 2022 Summary 2022 Sales of $3,155M, Non-GAAP EPS of $4.25 $4.0B $7.00 2019 2020 2021 2022 Sales EPS $1,200 $3.5B $3.7B $6.00 $5.98 $3.0B $3.2B $1,000 $3.1B $5.00 $2.5B $4.62 $800 $4.25 $4.00 $2.0B $2.3B $2.1B $2.1B $600 $3.00 $1.5B $1.8B $2.86 $400 $2.34 $2.37 $2.00 $1.0B $200 $0.5B $1.51
Slide 7: 2022 Summary & Outlook
2022 Summary & Outlook • 2022 Summary: – Total Company revenues second highest in history but down 15% from record 2021 – SOC test market in ‘22 declined ~6% from ‘21 to ~$4.6B, mobility segment estimated down ~20%+ – Memory test market declined ~5% from ‘21 to ~$960M – Test customers began working
Slide 8: Fourth Quarter and Full Year 2022 Financial Results, Earnings Model Update and Q1 2023 Guidance
Fourth Quarter and Full Year 2022 Financial Results, Mid-Term Earnings Model Update and First Quarter 2023 Guidance Sanjay Mehta, Teradyne Vice President and Chief Financial Officer 8
Slide 9: Q4'22 Non-GAAP Results
Q4’22 Non-GAAP Results $s in millions, except EPS Q4’21 Actual(1) Q3’22 Actual(1) Q4’22 Actual(1) Sales $885M $827M $732M Gross Margin 59.5% $527M 58.7% $485M 57.4% $420M R&D 12.4% $110M 13.5% $112M 14.9% $109M SG&A 16.1% $143M 16.4% $136M 19.5% $143M OPEX 28.6% $253M 29.9% $247M 34.4% $252M Operati
Slide 10: Q4'22 Segment Summary
Q4’22 Segment Summary Semiconductor Industrial System Test Wireless Test Test Automation 4th Quarter $481M $100M $40M $110M Sales Sales down 19% vs Q4’21 Sales down 22% vs Q4’21 Sales as reported down 2% Sales down 23% vs Q4’21 due to soft complex SOC vs Q4’21, up 7% in constant due to lower cellula
Slide 11: Q1'23 Non-GAAP Guidance
Q1’23 Non-GAAP Guidance $s in millions, except EPS Q4’22 Actual(1) Q1’23 Guidance(1) Sales $732M $550M - $630M Gross Margin 57.4% 55% - 56% OPEX 34.4% 44% - 39% Operating Profit 23.1% 10% - 17% Effective Tax Rate 12.3% 16.8% EPS $0.92 $0.28 - $0.52 Diluted Shares 164M 165M 11 (1) See attached append
Slide 12: Teradyne Non-GAAP Earnings Model
Teradyne Non-GAAP Earnings Model Financial Model (1)(2) 2022 2026E (New Model) 2022 Sales Mix 2026E Sales Mix(3) TER Revenue ($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 In
Slide 13: 2022 Summary & 2023 Outlook
2022 Summary & 2023 Outlook • 2022 Summary: – Total Company revenues second highest in history but down 15% from record 2021 – SOC test market in ‘22 declined ~6% from ‘21 to ~$4.6B, mobility segment estimated down ~20%+ – Memory test market declined ~5% from ‘21 to ~$960M – Test customers began wor
Slide 14: Supplemental Information
Supplemental Information 14
Slide 15: Annual Non-GAAP Results
Annual Non-GAAP Results $s in millions, except EPS 2021(1) 2022(1) Sales $3,703M $3,155M Gross Margin 59.6% $2,207M 59.2% $1,867M R&D 11.5% $428M 14.0% $441M SG&A 14.8% $548M 17.7% $558M OPEX 26.3% $975M 31.7% $999M Operating Profit 33.3% $1,231M 27.5% $868M Income Taxes (& effective tax rate) 14.5%
Slide 16: Balance Sheet & Capital Return
Balance Sheet & Capital Return Q4’21 Q3’22 Q4’22 Actual Actual Actual Cash and Marketable Securities $1,500M $887M $1,005M Inventory $243M $311M $325M DSO 55 Days 58 Days 60 Days Capital Additions $29M $39M $35M Depreciation and Amortization(1) $41M $41M $39M Free Cash Flow(2) $302M $233M $149M Buyb
Slide 17: History of Capital Allocation
History of Capital Allocation • Since 2015, 74.4M shares repurchased at an average price of ~$46 per share 2015 2016 2017 2018 2019 2020 2021 2022 Cumulative ($M) Buybacks $300M $146M $200M $823M $500M $88M $600M $752M $3,410M Dividends $51M $49M $55M $67M $61M $66M $66M $70M $486M Acquisitions $283
Slide 18: 2026 Bottom-Up Earnings Model In-Line with Recent Growth Trends
2026 Bottom-Up Earnings Model In-Line with Recent Growth Trends Revenue EPS $10.00 $6.0B $5.0B $8.00 $4.0B $3.7B $5.98 $3.1B $6.00 $4.62 $3.0B $2.1B $3.2B $1.8B $4.00 $4.25 $2.0B $2.3B $2.1B $2.34 $2.86 $1.0B $2.00$1.51 $2.37 $0.0B 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 $- 2016 2017
Slide 19: Semiconductor Test Market Growth Trends Are Favorable
Semiconductor Test Market Growth Trends Are Favorable Semiconductor Test (1) SOC Memory $6,000 SOC market powered by unit growth, complexity, $5,000 new technology 11% adoption CAGR $4,000 Memory test driven by bit growth, diversity, higher bandwidth $3,000 $2,000 2022 Market Sizes 9% CAGR $1,000 $1
Slide 20: 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 21: 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 22: 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 23: 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 24: 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 25: 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 26: 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 27: 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 28: 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 29: 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 30: GAAP to Non-GAAP Reconciliation
Appendix | GAAP to Non-GAAP Reconciliation Twelve Months Ended 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 - non-G
Slide 31: GAAP to Non-GAAP Reconciliation
Appendix | GAAP to Non-GAAP Reconciliation Q4'21 Q3'22 Q4'22 Q1'23 Low Guidance Q1'23 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 $271 31% $254 31% $254 35% $249 45% $253 40% Intangible Asset Amortization -$5 -1% -$5 -1% -$5 -1% -$
Slide 32: GAAP to Non-GAAP Reconciliation
Appendix | GAAP to Non-GAAP Reconciliation Quarter Ended Twelve Months Ended December December 31, 31, Percentage December 31, December 31, Percentage 2022 2021 Change 2022 2021 Change Industrial Automation segment revenues As reported 110.4 112.9 -2% 403.1 375.9 7% Currency exchange rate fluctuatio
Slide 33: 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 34: GAAP to Non-GAAP Reconciliation
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 34