Teradyne Reports Third Quarter 2022 Results

 

GAAP to Non-GAAP Earnings Reconciliation                  
                          
(In millions, except per share amounts)                       
            Quarter Ended            
    October 2, 2022  % of Net Revenues      July 3,
2022
  % of Net Revenues      October 3, 2021  % of Net Revenues    
                                     
Net revenues $ 827.1                 $ 840.8                 $ 950.5              
                                                   
Gross profit GAAP and non-GAAP $ 485.4       58.7 %           $ 506.4     60.2 %           $ 571.0     60.1 %        
                                                   
Income from operations - GAAP $ 231.5       28.0 %           $ 248.0     29.5 %           $ 322.4     33.9 %        
  Restructuring and other (1)   1.8       0.2 %             2.0     0.2 %             1.2     0.1 %        
  Acquired intangible assets amortization   4.7       0.6 %             4.9     0.6 %             5.4     0.6 %        
Income from operations - non-GAAP $ 238.0       28.8 %           $ 254.9     30.3 %           $ 329.0     34.6 %        
                                                   
              Net Income
per Common Share
          Net Income
per Common Share
          Net Income
per Common Share
      October 2, 2022   % of Net Revenues   Basic   Diluted   July 3,
2022
  % of Net Revenues   Basic   Diluted   October 3, 2021   % of Net Revenues   Basic   Diluted
Net income - GAAP $ 183.5       22.2 %   $ 1.17     $ 1.10     $ 197.8     23.5 %   $ 1.24     $ 1.16     $ 256.7     27.0 %   $ 1.56     $ 1.41  
  Restructuring and other (1)   1.8       0.2 %     0.01       0.01       2.0     0.2 %     0.01       0.01       1.2     0.1 %     0.01       0.01  
  Acquired intangible assets amortization   4.7       0.6 %     0.03       0.03       4.9     0.6 %     0.03       0.03       5.4     0.6 %     0.03       0.03  
  Loss on convertible debt conversions (2)   -       -       -       -       -     -       -       -       20.2     2.1 %     0.12       0.11  
  Interest and other (2)   -       -       -       -       -     -       -       -       2.3     0.2 %     0.01       0.01  
  Exclude discrete tax adjustments   (0.5 )     -0.1 %     (0.00 )     (0.00 )     1.6     0.2 %     0.01       0.01       (5.9 )   -0.6 %     (0.04 )     (0.03 )
  Non-GAAP tax adjustments   (0.3 )     -0.0 %     (0.00 )     (0.00 )     (2.3 )   -0.3 %     (0.01 )     (0.01 )     (1.3 )   -0.1 %     (0.01 )     (0.01 )
  Convertible share adjustment (3)   -       -       -       0.01       -     -       -       0.01       -     -       -       0.06  
Net income - non-GAAP $ 189.2       22.9 %   $ 1.21     $ 1.15     $ 204.0     24.3 %   $ 1.28     $ 1.21     $ 278.6     29.3 %   $ 1.69     $ 1.59  
                                                   
GAAP and non-GAAP weighted average common shares - basic   156.4                   159.6                   164.6              
GAAP weighted average common shares - diluted   166.7                   171.2                   182.0              
  Exclude dilutive shares related to convertible note transaction   (1.5 )                 (1.9 )                 (6.5 )            
Non-GAAP weighted average common shares - diluted   165.2                   169.3                   175.5              
                                                   
Industrial Automation segment revenues                                              
As reported $ 89.1                                 $ 91.0              
Currency exchange rate fluctuations   6.7                                   (1.8 )            
Constant currency total revenues (4) $ 95.8                                 $ 89.2              
                                                   
(1 Restructuring and other consists of:                                              
      Quarter Ended Quarter Ended            
      October 2, 2022               July 3,
2022
              October 3, 2021            
    Employee severance $ 1.2                 $ 0.4                 $ 0.6              
    Acquisition related expenses and compensation   -                   -                   0.3              
    Other   0.6                   1.7                   0.3              
      $ 1.8                 $ 2.0                 $ 1.2              
                                                   
                                                   
(2 For the quarter ended October 3, 2021, adjustment to exclude loss on convertible debt conversions. For the quarter ended October 3, 2021, Interest and other included non-cash convertible debt interest expense.
                                                   
(3 For the quarters ended October 2, 2022, July 3, 2022, and October 3, 2021, the non-GAAP diluted EPS calculation adds back $0.2 million, $0.2 million, and $0.4 million, respectively, of convertible debt interest expense to non-GAAP net income. For the quarters ended October 2, 2022, July 3, 2022, and October 3, 2021, non-GAAP weighted average diluted common shares include 8.3 million, 9.0 million and 9.8 million shares, respectively, from the convertible note hedge transaction.
     
(4 Currency exchange rates are used to convert the operating results for countries where the functional currency is not the U.S. dollar into U.S. dollars. We calculate the effect of changes in currency exchange rates as the difference between period activity translated using the period's currency exchange rates and the rates as of December 31, 2021.
                                                   
      Nine Months Ended                
      October 2, 2022   % of Net Revenues           October 3, 2021   % of Net Revenues                        
                                                   
Net Revenues $ 2,423.2                 $ 2,817.8                              
                                                   
Gross profit GAAP and non-GAAP $ 1,446.7       59.7 %           $ 1,679.6     59.6 %                        
                                                   
Income from operations - GAAP $ 665.4       27.5 %           $ 944.3     33.5 %                        
  Restructuring and other (1)   19.6       0.8 %             (3.4 )   -0.1 %                        
  Acquired intangible assets amortization   14.7       0.6 %             16.3     0.6 %                        
Income from operations - non-GAAP $ 699.7       28.9 %           $ 957.2     34.0 %                        
                                                   
              Net Income
per Common Share
          Net Income
per Common Share
               
      October 2, 2022   % of Net Revenues   Basic   Diluted   October 3, 2021   % of Net Revenues   Basic   Diluted                
Net income - GAAP $ 543.2       22.4 %   $ 3.41     $ 3.17     $ 790.5     28.1 %   $ 4.77     $ 4.26                  
  Restructuring and other (1)   19.6       0.8 %     0.12       0.11       (3.4 )   -0.1 %     (0.02 )     (0.02 )                
  Acquired intangible assets amortization   14.7       0.6 %     0.09       0.09       16.3     0.6 %     0.10       0.09                  
  Loss on convertible debt conversions (2)   -       -       -       -       25.4     0.9 %     0.15       0.14                  
  Interest and other (2)   -       -       -       -       9.1     0.3 %     0.05       0.05                  
  Pension mark-to-market adjustment (2)   -       -       -       -       (0.6 )   -0.0 %     (0.00 )     (0.00 )                
  Exclude discrete tax adjustments   (9.3 )     -0.4 %     (0.06 )     (0.05 )     (22.1 )   -0.8 %     (0.13 )     (0.12 )                
  Non-GAAP tax adjustments   (5.9 )     -0.2 %     (0.04 )     (0.03 )     (3.2 )   -0.1 %     (0.02 )     (0.02 )                
  Convertible share adjustment (3)   -       -       -       0.04       -     -       -       0.22                  
Net income - non-GAAP $ 562.3       23.2 %   $ 3.53     $ 3.33     $ 812.0     28.8 %   $ 4.90     $ 4.61                  
                                                   
GAAP and non-GAAP weighted average common shares - basic   159.3                   165.7                              
GAAP weighted average common shares - diluted   171.2                   185.5                              
  Exclude dilutive shares from convertible note   (2.0 )                 (8.8 )                            
Non-GAAP weighted average common shares - diluted   169.2                   176.7                              
                                                   
(1 Restructuring and other consists of:                                              
      Nine Months Ended                            
      October 2, 2022               October 3, 2021                            
    Litigation settlement $ 14.7                 $ -                              
    Employee severance   2.1                   1.2                              
    Acquisition related expenses and compensation   (0.2 )                 0.3                              
    Contingent consideration fair value adjustment   -                   (7.2 )                            
    Other   2.9                   2.2                   -              
      $ 19.6                 $ (3.4 )                            
                                                   
(2 For the nine months ended October 3, 2021, adjustment to exclude loss on convertible debt conversions. For the nine months ended October 3, 2021, Interest and other included non-cash convertible debt interest expense. For the nine months ended October 3, 2021, adjustment to exclude actuarial gain recognized under GAAP in accordance with Teradyne's mark-to-market pension accounting.
                                                   
(3 For the nine months ended October 2, 2022 and October 3, 2021, the non-GAAP diluted EPS calculation adds back $0.7 million and $2.6 million, respectively, of convertible debt interest expense to non-GAAP net income. For the nine months ended October 2, 2022 and October 3, 2021, non-GAAP weighted average diluted common shares include 9.1 million and 9.8 million shares, respectively, related to the convertible debt hedge transaction.
                                                   
GAAP to Non-GAAP Reconciliation of Fourth Quarter 2022 guidance:                                    
                                                   
GAAP and non-GAAP fourth quarter revenue guidance:     $670 million to $750 million                                    
GAAP net income per diluted share     $ 0.59     $ 0.84                                      
  Exclude acquired intangible assets amortization       0.03       0.03                                      
Non-GAAP net income per diluted share     $ 0.62     $ 0.86                                      
                                                   
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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