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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