Teradyne Reports Fourth Quarter and Fiscal Year 2021 Results

GAAP to Non-GAAP Earnings Reconciliation

(In millions, except per share amounts)
																	Quarter Ended
				December 31, 2021			% of Net Revenues										October 3, 2021			% of Net Revenues								December 31, 2020			% of Net 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	%								$	571.0		60.1	%							$	449.8		59.3	%

Income from operations - GAAP				$	264.4			29.9	%								$	322.4		33.9	%							$	234.1		30.8	%
		Restructuring and other (1)			4.7			0.5	%									1.2		0.1	%								(15.1	)	-2.0	%
		Acquired intangible assets amortization			5.2			0.6	%									5.4		0.6	%								5.8		0.8	%
		Equity modification charge			-			-										-		-									0.8		0.1	%
Income from operations - non-GAAP				$	274.3			31.0	%								$	329.0		34.6	%							$	225.6		29.7	%

											Net Income per Common Share											Net Income per Common Share											Net Income per Common Share
				December 31, 2021			% of Net Revenues				Basic			Diluted			October 3, 2021			% of Net Revenues		Basic			Diluted			December 31, 2020			% of Net Revenues		Basic			Diluted
Net income - GAAP				$	230.3			26.0	%		$	1.41		$	1.29		$	256.7		27.0	%	$	1.56		$	1.41		$	196.3		25.9	%	$	1.18		$	1.05
		Restructuring and other (1)			4.7			0.5	%			0.03			0.03			1.2		0.1	%		0.01			0.01			(15.1	)	-2.0	%		(0.09	)		(0.08	)
		Acquired intangible assets amortization			5.2			0.6	%			0.03			0.03			5.4		0.6	%		0.03			0.03			5.8		0.8	%		0.03			0.03
		Loss on convertible debt conversions (2)			3.4			0.4	%			0.02			0.02			20.2		2.1	%		0.12			0.11			-		-			-			-
		Interest and other (2)			1.2			0.1	%			0.01			0.01			2.3		0.2	%		0.01			0.01			3.7		0.5	%		0.02			0.02
		Pension mark-to-market adjustment (2)			(1.6	)		-0.2	%			(0.01	)		(0.01	)		-		-			-			-			7.7		1.0	%		0.05			0.04
		Equity modification charge			-			-				-			-			-		-			-			-			0.8		0.1	%		0.00			0.00
		Exclude discrete tax adjustments			(6.5	)		-0.7	%			(0.04	)		(0.04	)		(5.9	)	-0.6	%		(0.04	)		(0.03	)		(2.1	)	-0.3	%		(0.01	)		(0.01	)
		Non-GAAP tax adjustments			1.7			0.2	%			0.01			0.01			(1.3	)	-0.1	%		(0.01	)		(0.01	)		(3.9	)	-0.5	%		(0.02	)		(0.02	)
		Convertible share adjustment (3)			-			-				-			0.03			-		-			-			0.06			-		-			-			0.06
Net income - non-GAAP				$	238.4			26.9	%		$	1.46		$	1.37		$	278.6		29.3	%	$	1.69		$	1.59		$	193.2		25.5	%	$	1.16		$	1.10

GAAP and non-GAAP weighted average common shares - basic					162.8													164.6											166.1
GAAP weighted average common shares - diluted					178.0													182.0											186.8
		Exclude dilutive shares related to convertible note transaction			(3.4	)												(6.5	)										(10.0	)
Non-GAAP weighted average common shares - diluted					174.6													175.5											176.8

(1	)	Restructuring and other consists of:
				Quarter Ended
				December 31, 2021													October 3, 2021											December 31, 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		-													-											(15.3	)
			Other		4.3													0.3											-
				$	4.7												$	1.2										$	(15.1	)


(2	)	For the quarters ended December 31, 2021, October 3, 2021, and December 31, 2020, Interest and other includes non-cash convertible debt interest expense. For the quarters ended December 31, 2021 and October 3, 2021, adjustment to exclude loss on convertible debt conversions. For the quarters ended December 31, 2021 and December 31, 2020, adjustments to exclude actuarial (gain) loss recognized under GAAP in accordance with Teradyne's mark-to-market pension accounting.

(3	)	For the quarters ended December 31, 2021, October 3, 2021, and December 31, 2020, the non-GAAP diluted EPS calculation adds back $0.4 million, $0.5 million, and $1.7 million, respectively, of convertible debt interest expense to non-GAAP net income, and non-GAAP weighted average diluted common shares include 10.5 million, 9.8 million and 8.9 million shares, respectively, from the convertible note hedge transaction.

				Twelve Months Ended
				December 31, 2021			% of Net Revenues										December 31, 2020			% of Net 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		57.2	%

Income from operations - GAAP				$	1,208.7			32.6	%								$	928.4		29.7	%
		Acquired intangible assets amortization			21.5			0.6	%									30.8		1.0	%
		Restructuring and other (1)			1.3			0.0	%									(13.2	)	-0.4	%
		Inventory step-up			-			-										0.4		0.0	%
		Equity modification charge			-			-										0.8		0.0	%
Income from operations - non-GAAP				$	1,231.5			33.3	%								$	947.2		30.3	%

											Net Income per Common Share											Net Income per Common Share
				December 31, 2021			% of Net Revenues				Basic			Diluted			December 31, 2020			% of Net Revenues		Basic			Diluted
Net income - GAAP				$	1,020.8			27.6	%		$	6.19		$	5.56		$	784.1		25.1	%	$	4.72		$	4.28
		Acquired intangible assets amortization			21.5			0.6	%			0.13			0.12			30.8		1.0	%		0.19			0.17
		Restructuring and other (1)			1.3			0.0	%			0.01			0.01			(13.2	)	-0.4	%		(0.08	)		(0.07	)
		Interest and other (2)			10.3			0.3	%			0.06			0.06			14.4		0.5	%		0.09			0.08
		Loss on convertible debt conversions (2)			28.8			0.8	%			0.17			0.16			-		-			-			-
		Pension mark-to-market adjustment (2)			(2.2	)		-0.1	%			(0.01	)		(0.01	)		10.3		0.3	%		0.06			0.06
		Inventory step-up			-			-				-			-			0.4		0.0	%		0.00			0.00
		Equity modification charge			-			-				-			-			0.8		0.0	%		0.00			0.00
		Exclude discrete tax adjustments			(28.6	)		-0.8	%			(0.17	)		(0.16	)		(15.2	)	-0.5	%		(0.09	)		(0.08	)
		Non-GAAP tax adjustments			(1.5	)		-0.0	%			(0.01	)		(0.01	)		(11.9	)	-0.4	%		(0.07	)		(0.07	)
		Convertible share adjustment (3)			-			-				-			0.24			-		-			-			0.25
Net income - non-GAAP				$	1,050.4			28.4	%		$	6.37		$	5.98		$	800.5		25.6	%	$	4.82		$	4.62

GAAP and non-GAAP weighted average common shares - basic					165.0													166.1
GAAP weighted average common shares - diluted					183.6													183.0
		Exclude dilutive shares from convertible note			(7.4	)												(8.5	)
Non-GAAP weighted average common shares - diluted					176.2													174.5

(1	)	Restructuring and other consists of:
				Twelve Months Ended
				December 31, 2021													December 31, 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											-
				$	1.3												$	(13.2	)


(2	)	For the twelve months ended December 31, 2021 and December 31, 2020, Interest and other included non-cash convertible debt interest expense. For the twelve months ended December 31, 2021, adjustment to exclude loss on convertible debt conversions. For the twelve months ended December 31, 2021 and December 31, 2020, adjustments to exclude actuarial (gain) loss recognized under GAAP in accordance with Teradyne's mark-to-market pension accounting.
(3	)	For the twelve months ended December 31, 2021 and December 31, 2020, the non-GAAP diluted EPS calculation adds back $3.7 million and $6.8 million, respectively, of convertible debt interest expense to non-GAAP net income and non-GAAP weighted average diluted common shares include 10.0 million and 7.0 million shares, respectively, related to the convertible debt hedge transaction.

GAAP to Non-GAAP Reconciliation of First Quarter 2022 guidance:

GAAP and non-GAAP first quarter revenue guidance:							$700 million			to	$770 million
GAAP net income per diluted share							$	0.71			$	0.93
		Exclude acquired intangible assets amortization						0.03				0.03
		Exclude non-cash convertible debt interest						0.01				0.01
		Tax effect of non-GAAP adjustments						(0.01	)			(0.01	)
		Convertible share adjustment						0.01				0.02
Non-GAAP net income per diluted share							$	0.76			$	0.98

GAAP to Non-GAAP Reconciliation of Twelve Months 2016:

				Twelve Months Ended
							Net (Loss) Income per Common Share
				December 31, 2016			Diluted
Net loss - GAAP				$	(43.4	)	$	(0.21	)
		Goodwill impairment (1)			254.9			1.25
		Acquired intangible assets impairment (1)			83.3			0.41
		Acquired intangible assets amortization			52.6			0.26
		Restructuring and other (2)			21.9			0.11
		Pension mark-to-market adjustments (3)			(3.2	)		(0.02	)
		Interest and other (4)			0.6			0.00
		Exclude discrete tax adjustments (5)			(4.5	)		(0.02	)
		Tax effect of non-GAAP adjustments			(53.3	)		(0.26	)
Net income - non-GAAP				$	308.9		$	1.51

GAAP and non-GAAP weighted average common shares - basic					202.6
GAAP weighted average common shares - diluted					202.6
		Include dilutive shares			1.8
Non-GAAP weighted average common shares - diluted					204.4


(1	)	Goodwill and acquired intangible assets impairment related to Teradyne's Wireless Test business segment.

(2	)	Restructuring and other consists of:
				Twelve Months Ended
				December 31, 2016
			Contingent consideration fair value adjustment	$	15.9
			Employee severance		6.0
			Impairment of fixed assets and expenses related to Japan earthquake		5.4
			Property insurance recovery		(5.4	)
				$	21.9

(3	)	Actuarial (gains) losses recognized under GAAP in accordance with Teradyne's mark-to-market pension accounting.

(4	)	For the year ended December 31, 2016, Interest and other included non-cash convertible debt interest expense.

(5	)	For the year ended December 31, 2016, adjustment to exclude discrete income tax items and an adjustment to treat Wireless Test business segment goodwill and intangible assets impairments as discrete tax items.

GAAP to Non-GAAP Reconciliation of 2024 Earnings Model:

				Mid Point of 2024 Earnings Model
							Net Income per Common Share
				December 31, 2024			Diluted
Net Income - GAAP				$	1,321.3		$	7.90
		Acquired intangible assets amortization			19.5			0.12
		Tax effect of non-GAAP adjustment			(3.3	)		(0.02	)
Net income - non-GAAP				$	1,337.5		$	8.00


For press releases and other information of interest to investors, please visit Teradyne's homepage at http://www.teradyne.com.
		Contact: Teradyne, Inc.
			Andy Blanchard 978-370-2425
			Vice President of Corporate Relations

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