Teradyne Reports Third Quarter 2022 Results

  • Revenue and earnings above the mid-point of Q3 guidance
  • Test revenue declined 14% from Q3’21, incrementally stronger than July guidance on improved supply chain performance
  • Industrial Automation revenue declined 2% from Q3’21 in dollar terms, grew 7% in constant currency
  Q3’22 Q3’21 Q2’22
Revenue (mil) $827 $951 $841
GAAP EPS $1.10 $1.41 $1.16
Non-GAAP EPS $1.15 $1.59 $1.21
Gross Margin 58.7% 60.1% 60.2%

NORTH READING, Mass., Oct. 25, 2022 (GLOBE NEWSWIRE) — Teradyne, Inc. (NASDAQ: TER) reported revenue of $827 million for the third quarter of 2022 of which $576 million was in Semiconductor Test, $116 million in System Test, $46 million in Wireless Test and $89 million in Industrial Automation (IA). GAAP net income for the third quarter was $183.5 million or $1.10 per diluted share. On a non-GAAP basis, Teradyne’s net income in the third quarter was $189.2 million, or $1.15 per diluted share, which excluded acquired intangible asset amortization and restructuring and other charges.

“We delivered revenue and earnings above the mid-point of our July outlook as some supply line constraints eased through the quarter enabling greater than expected shipments to memory, automotive and industrial semiconductor test customers,” said Teradyne CEO Mark Jagiela. “The short-term outlook in semiconductor test remains mixed with automotive and industrial demand relatively strong while muted compute and mobility demand persists. In industrial automation, slowing manufacturing activity and foreign exchange headwinds continue to impact our full year growth outlook.”

Guidance for the fourth quarter of 2022 is revenue of $670 million to $750 million, with GAAP net income of $0.59 to $0.84 per diluted share and non-GAAP net income of $0.62 to $0.86 per diluted share. Non-GAAP guidance excludes acquired intangible asset amortization.

Webcast
A conference call to discuss the third quarter results, along with management’s business outlook, will follow at 8:30 a.m. ET, Wednesday, October 26. Interested investors should access the webcast at www.teradyne.com and click on “Investors” at least five minutes before the call begins. Presentation materials will be available starting at 8:30 a.m. ET. A replay will be available on the Teradyne website at https://investors.teradyne.com/events-presentations.

Non-GAAP Results
In addition to disclosing results that are determined in accordance with GAAP, Teradyne also discloses non-GAAP results of operations that exclude certain income items and charges and discloses certain revenue at constant currency. These results are provided as a complement to results provided in accordance with GAAP. Non-GAAP income from operations and non-GAAP net income exclude acquired intangible assets amortization, restructuring and other, pension actuarial gains and losses, losses on convertible debt conversions, non-cash convertible debt interest, discrete income tax adjustments, and includes the related tax impact on non-GAAP adjustments. GAAP requires that these items be included in determining income from operations and net income. Non-GAAP income from operations, non-GAAP net income, non-GAAP income from operations as a percentage of revenue, non-GAAP net income as a percentage of revenue, and non-GAAP net income per share are non-GAAP performance measures presented to provide meaningful supplemental information regarding Teradyne’s baseline performance before gains, losses or other charges that may not be indicative of Teradyne’s current core business or future outlook. Constant currency revenue excludes the impact of changes in foreign currency exchange rates, which are required by GAAP. These non-GAAP performance measures are used to make operational decisions, to determine employee compensation, to forecast future operational results, and for comparison with Teradyne’s business plan, historical operating results and the operating results of Teradyne’s competitors. Non-GAAP diluted shares include the impact of Teradyne’s call option on its shares. Management believes each of these non-GAAP performance measures provides useful supplemental information for investors, allowing greater transparency to the information used by management in its operational decision making and in the review of Teradyne’s financial and operational performance, as well as facilitating meaningful comparisons of Teradyne’s results in the current period compared with those in prior and future periods. A reconciliation of each available GAAP to non-GAAP financial measure discussed in this press release is contained in the attached exhibits and on the Teradyne website at www.teradyne.com by clicking on “Investor Relations” and then selecting “Financials” and the “GAAP to Non-GAAP Reconciliation” link. The non-GAAP performance measures discussed in this press release may not be comparable to similarly titled measures used by other companies. The presentation of non-GAAP measures is not meant to be considered in isolation, as a substitute for, or superior to, financial measures or information provided in accordance with GAAP.

About Teradyne
Teradyne (NASDAQ:TER) brings high-quality innovations such as smart devices, life-saving medical equipment and data storage systems to market, faster. Its advanced test solutions for semiconductors, electronic systems, wireless devices and more ensure that products perform as they were designed. Its Industrial Automation offerings include collaborative and mobile robots that help manufacturers of all sizes improve productivity and lower costs. In 2021, Teradyne had revenue of $3.7 billion and today employs over 6,500 people worldwide. For more information, visit teradyne.com. Teradyne® is a registered trademark of Teradyne, Inc. in the U.S. and other countries.

Safe Harbor Statement
This release 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 chain conditions on the business, customer sales expectations, the payment of a quarterly dividend, the repurchase of Teradyne common stock pursuant to a share repurchase program, sanctions against Russia and Russian companies, and the impact of U.S. and Chinese export and tariff laws, including new regulations published by the U.S. Department of Commerce on October 7, 2022. Such statements are based on the current assumptions and expectations of Teradyne’s management and are neither promises nor guarantees of future performance, events, customer sales, supply chain conditions or improvements, earnings per share, use of cash, payment of dividends, repurchases of common stock, payment of the senior convertible notes, the impact of the COVID-19 pandemic, sanctions against Russia and Russian companies, the impact of any tariffs or export controls imposed by the U.S. or China, compliance with trade protection measures or export restrictions, the impact of U.S. Department of Commerce or other government agency regulations relating to Huawei, HiSilicon and other customers or potential customers, the impact of U.S. Department Commerce export control regulations for certain U.S. products and technology sold to military end users or for military end-use in China, Russia and Venezuela, or the impact of regulations published by the U.S. Department of Commerce relating to the export of semiconductors and semiconductor manufacturing equipment destined to certain end users and for certain end uses in China. There can be no assurance that management’s estimates of Teradyne’s future results or other forward-looking statements will be achieved. Specifically, Teradyne’s 2024 earnings model is aspirational and includes many assumptions. There can be no assurance that these assumptions will be accurate or that model results will be achieved. As set forth below, there are many factors that could cause our 2024 earnings model and actual results to differ materially from those presently expected. Additionally, the current dividend and share repurchase programs may be modified, suspended or discontinued at any time.

On October 7, 2022, the U.S. Department of Commerce published new regulations restricting the export to China of advanced semiconductors, supercomputer technology, equipment for the manufacturing of advanced semiconductors and components and technology for the manufacturing in China of certain semiconductor manufacturing equipment. The new restrictions are lengthy and complex. Teradyne continues to assess the impact of these regulations on its business. At this time, the Company has determined that restrictions on the sale of semiconductor testers in China to test certain advanced semiconductors will impact Teradyne’s sales to certain companies in China. Several multinational companies manufacturing these advanced semiconductors in China have obtained one-year licenses allowing suppliers such as Teradyne to continue to provide testers to the facilities operated by these companies. We expect that other companies manufacturing advanced semiconductors in China will not receive licenses, thereby restricting Teradyne’s ability to provide testers to the facilities operated by these companies that do not receive a license. The Company also is assessing the filing of license requests to sell to and support certain customers in China for certain end uses that, if granted, may reduce the impact of these restrictions on the Company’s business. At this time, Teradyne does not know the impact these end user and end use restrictions will have on its business in China or on future revenues. In addition to the specific restrictions impacting Teradyne’s business, the regulations may have an adverse impact on certain actual or potential customers and on the global semiconductor industry. To the extent the regulations impact actual and potential customers or disrupt the global semiconductor industry, Teradyne’s business and revenues will be adversely impacted.

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 China. Teradyne has received a temporary authorization from the Department of Commerce allowing the Company to continue its manufacturing and development operations in China until the Department of Commerce issues a license to replace this temporary authorization. Teradyne will file an application with the Department of Commerce for a license to replace the temporary authorization by November 17, 2022. The Company cannot assess the likelihood or timing of receiving this license. In addition to requesting a license, the Company is implementing procedures for minimizing the impact of these new regulations, but there is no assurance that these procedures will succeed.

Following Russia’s invasion of Ukraine in February 2022, the U.S. and other countries imposed significant sanctions against the Russian government and many Russian companies and individuals. Although Teradyne does not have significant operations in Russia, the sanctions could impact Teradyne’s business in other countries and could have a negative impact on the Company’s supply chain, either of which could adversely affect Teradyne’s business and financial results.

COVID-19 has resulted in authorities implementing numerous measures to try to contain the virus, such as travel bans and restrictions, quarantines, government vaccination mandates and other government regulations. These measures have impacted and may further impact Teradyne’s workforce and operations, the operations of its customers, and those of its contract manufacturers and suppliers. As Teradyne implements measures to comply with additional regulations, the Company may experience increased compliance costs, increased risk of non-compliance and increased risk of employee attrition.

The COVID-19 pandemic has adversely impacted the Company’s results of operations, including increased costs company-wide and constraints within the Company’s supply chain. The Company cannot accurately estimate the amount of the impact on Teradyne’s 2022 financial results and to its future financial results. The COVID-19 outbreak has significantly increased economic and demand uncertainty in Teradyne’s markets. This uncertainty resulted in a significant decrease in demand for certain Teradyne products and could continue to impact demand for an uncertain period of time. The spread of COVID-19 has caused Teradyne to modify its business practices (including employee travel, employees working remotely, and cancellation of in person participation in meetings, events and conferences) and the Company may take further actions as may be required by government authorities or that it determines are in the best interests of its employees, customers, contract manufacturers and suppliers. There is uncertainty that such measures will be sufficient to mitigate the risks posed by the virus, and Teradyne’s ability to perform critical functions could be impacted. The degree to which COVID-19 continues to impact Teradyne’s results will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to, the duration and continued spread of the virus, its severity, the actions to contain the virus or the availability and impact of vaccines in countries where the Company does business, and how quickly and to what extent normal economic and operating conditions can resume.

Important factors that could cause actual results, the 2024 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 affecting the markets in which Teradyne operates; decreased or delayed product demand from one or more significant customers; development, delivery and acceptance of new products; the ability to grow the Industrial Automation business; increased research and development spending; deterioration of Teradyne’s financial condition; the continued impact of the COVID-19 pandemic and related government responses on the market and demand for Teradyne’s products, on its contract manufacturers and supply chain, and on its workforce; the impact of the global semiconductor supply shortage on our supply chain and contract manufacturers; the consummation and success of any mergers or acquisitions; demand for products by the Company’s largest customers; unexpected cash needs; insufficient cash flow to make required payments and pay the principal amount on the senior convertible notes; the business judgment of the board of directors that a declaration of a dividend or the repurchase of common stock is not in the Company’s best interests; additional U.S. tax regulations or IRS guidance; the impact of any tariffs or export controls imposed by the U.S. or China; compliance with trade protection measures or export restrictions; the impact of U.S. Department of Commerce or other government agency regulations relating to Huawei, HiSilicon and other customers or potential customers; the impact of U.S. Department Commerce export control regulations for certain U.S. products and technology sold to military end users or for military end-use in China, Russia and Venezuela; sanctions imposed against the Russian government and certain Russian companies and individuals by the U.S., and other countries; the impact of regulations published by the U.S. Department of Commerce relating to semiconductors and semiconductor manufacturing equipment destined for certain end uses in China; and other events, factors and risks disclosed in filings with the SEC, including, but not limited to, the “Risk Factors” sections of Teradyne’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and Quarterly Report on Form 10-Q for the fiscal quarter ended July 3, 2022. The forward-looking statements provided by Teradyne in this press release represent management’s views as of the date of this release. Teradyne anticipates that subsequent events and developments may cause management’s views to change. However, while Teradyne may elect to update these forward-looking statements at some point in the future, Teradyne specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing Teradyne’s views as of any date subsequent to the date of this release.

TERADYNE, INC. REPORT FOR THIRD FISCAL QUARTER OF 2022                    
                           
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS      
       
                           
          Quarter Ended   Nine Months Ended
          October 2,
2022
  July 3,
2022
  October 3,
2021
  October 2,
2022
  October 3,
2021
                           
Net revenues   $ 827,073     $ 840,766     $ 950,501     $ 2,423,209     $ 2,817,835  
  Cost of revenues (exclusive of acquired intangible assets amortization shown separately below) (1)     341,694       334,377       379,500       976,508       1,138,227  
                           
Gross profit     485,379       506,389       571,001       1,446,701       1,679,608  
                           
Operating expenses:                    
  Selling and administrative     135,632       139,533       134,829       415,351       404,812  
  Engineering and development     111,715       111,951       107,220       331,781       317,644  
  Acquired intangible assets amortization     4,729       4,871       5,355       14,663       16,293  
  Restructuring and other (2)     1,796       2,044       1,197       19,554       (3,426 )
      Operating expenses     253,872       258,399       248,601       781,349       735,323  
                           
Income from operations     231,507       247,990       322,400       665,352       944,285  
                           
  Interest and other expense (3)     5,310       9,398       24,645       20,204       38,511  
                           
Income before income taxes     226,197       238,592       297,755       645,148       905,774  
  Income tax provision     42,712       40,805       41,037       101,948       115,225  
Net income   $ 183,485     $ 197,787     $ 256,718     $ 543,200     $ 790,549  
                           
Net income per common share:                    
Basic       $ 1.17     $ 1.24     $ 1.56     $ 3.41     $ 4.77  
Diluted       $ 1.10     $ 1.16     $ 1.41     $ 3.17     $ 4.26  
                           
Weighted average common shares – basic     156,364       159,563       164,583       159,325       165,690  
                           
Weighted average common shares – diluted (4)     166,733       171,159       181,987       171,156       185,492  
                           
                           
Cash dividend declared per common share   $ 0.11     $ 0.11     $ 0.10     $ 0.33     $ 0.30  
                           
                           
                           
(1 ) Cost of revenues includes:   Quarter Ended   Nine Months Ended
          October 2,
2022
  July 3,
2022
  October 3,
2021
  October 2,
2022
  October 3,
2021
      Provision for excess and obsolete inventory   $ 12,234     $ 5,105     $ 8,149     $ 18,929     $ 11,775  
      Sale of previously written down inventory     (269 )     (449 )     (824 )     (980 )     (2,043 )
          $ 11,965     $ 4,656     $ 7,325     $ 17,949     $ 9,732  
                           
(2 Restructuring and other consists of:   Quarter Ended   Nine Months Ended
          October 2,
2022
  July 3,
2022
  October 3,
2021
  October 2,
2022
  October 3,
2021
      Employee severance   $ 1,215     $ 383     $ 617     $ 2,148     $ 1,242  
      Litigation settlement                       14,700        
      Acquisition related expenses and compensation                 275       (201 )     313  
      Contingent consideration fair value adjustment                             (7,227 )
      Other     581       1,661       305       2,907       2,246  
          $ 1,796     $ 2,044     $ 1,197     $ 19,554     $ (3,426 )
                           
(3 Interest and other includes:   Quarter Ended   Nine Months Ended
          October 2,
2022
  July 3,
2022
  October 3,
2021
  October 2,
2022
  October 3,
2021
      Loss on convertible debt conversions   $     $     $ 20,153     $     $ 25,397  
      Non-cash convertible debt interest                 2,262             9,120  
      Pension actuarial gains                             (627 )
          $     $     $ 22,415     $     $ 33,890  
                           
(4 Under GAAP, when calculating diluted earnings per share, convertible debt must be assumed to have converted if the effect on EPS would be dilutive. Diluted shares assume the conversion of the convertible debt as the effect would be dilutive. Accordingly, for the quarters ended October 2, 2022, July 3, 2022, and October 3, 2021, 1.5 million, 1.9 million and 6.5 million shares, respectively, have been included in diluted shares. For the nine months ended October 2, 2022 and October 3, 2021, 2.0 million and 8.8 million shares, respectively, have been included in diluted shares. For the quarters ended October 2, 2022, July 3, 2022 and October 3, 2021, diluted shares also included 8.3 million, 9.0 million and 9.8 million shares, respectively, from the convertible note hedge transaction. For the nine months ended October 2, 2022 and October 3, 2021, diluted shares included 9.1 million and 9.8 million shares, respectively, from the convertible note hedge transaction.

CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)                    
                           
          October 2,
2022
  December 31,
2021
           
Assets                        
  Cash and cash equivalents   $ 710,746     $ 1,122,199              
  Marketable securities     65,310       244,231              
  Accounts receivable, net     530,349       550,749              
  Inventories, net     310,754       243,330              
  Prepayments     502,678       406,266              
  Other current assets     7,717       9,452              
      Total current assets     2,127,554       2,576,227              
                           
  Property, plant and equipment, net     415,181       387,240              
  Operating lease right-of-use assets, net     61,430       68,807              
  Marketable securities     111,039       133,858              
  Deferred tax assets     130,207       102,428              
  Retirement plans assets     13,805       15,110              
  Other assets     29,311       24,096              
  Acquired intangible assets, net     55,580       75,635              
  Goodwill     375,799       426,024              
      Total assets   $ 3,319,906     $ 3,809,425              
                           
Liabilities                      
  Accounts payable   $ 167,975     $ 153,133              
  Accrued employees’ compensation and withholdings     168,102       253,667              
  Deferred revenue and customer advances     143,591       146,185              
  Other accrued liabilities     126,457       124,187              
  Operating lease liabilities     17,079       19,977              
  Income taxes payable     64,141       88,789              
  Current debt     14,596       19,182              
      Total current liabilities     701,941       805,120              
                           
  Retirement plans liabilities     137,317       151,141              
  Long-term deferred revenue and customer advances     48,488       54,921              
  Long-term other accrued liabilities     15,506       15,497              
  Deferred tax liabilities     1,327       6,327              
  Long-term operating lease liabilities     51,872       56,178              
  Long-term income taxes payable     59,135       67,041              
  Debt       50,195       89,244              
      Total liabilities     1,065,781       1,245,469              
                           
Mezzanine equity           1,512              
Shareholders’ equity     2,254,125       2,562,444              
      Total liabilities, convertible common shares and shareholders’ equity   $ 3,319,906     $ 3,809,425              
                           
                           
                           
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)                    
                           
          Quarter Ended   Nine Months Ended    
          October 2,
2022
  October 3,
2021
  October 2,
2022
  October 3,
2021
   
Cash flows from operating activities:                    
  Net income   $ 183,485     $ 256,718     $ 543,200     $ 790,549      
                                       
  Adjustments to reconcile net income to net cash provided by operating activities:                    
    Depreciation     23,442       22,018       67,902       67,866      
    Stock-based compensation     12,298       11,418       37,420       34,649      
    Provision for excess and obsolete inventory     12,234       8,149       18,929       11,775      
    Amortization     4,917       8,283       15,012       27,626      
    Losses (gains) on investments     2,463       (100 )     11,436       (4,750 )    
    Deferred taxes     (4,776 )     (9,932 )     (28,373 )     (10,732 )    
    Contingent consideration fair value adjustment                       (7,227 )    
    Retirement plans actuarial gains                       (627 )    
    Loss on convertible debt conversions           20,153             25,397      
    Other     218       45       740       243      
                           
    Changes in operating assets and liabilities                  
      Accounts receivable     150,632       269,399       4,248       (103,299 )    
      Inventories     (22,135 )     2,035       (68,817 )     21,943      
      Prepayments and other assets     420       (21,148 )     (94,331 )     (138,564 )    
      Accounts payable and other liabilities     (28,071 )     (21,726 )     (71,682 )     65,064      
      Deferred revenue and customer advances     (20,059 )     (6,490 )     (5,896 )     8,699      
      Retirement plans contributions     (1,279 )     (1,384 )     (3,897 )     (4,123 )    
      Income taxes     (42,185 )     (14,778 )     (31,370 )     (17,406 )    
Net cash provided by operating activities     271,604       522,660       394,521       767,083      
                           
Cash flows from investing activities:                    
  Purchases of property, plant and equipment     (38,929 )     (29,205 )     (128,672 )     (103,162 )    
  Purchases of marketable securities     (19,294 )     (111,384 )     (267,175 )     (509,470 )    
  Proceeds from sales of marketable securities     115,558       93,325       259,200       209,437      
  Proceeds from maturities of marketable securities     42,440       111,064       182,092       571,277      
  Purchase of investment                       (12,000 )    
Net cash provided by investing activities     99,775       63,800       45,445       156,082      
                           
Cash flows from financing activities:                    
  Repurchase of common stock     (217,201 )     (209,596 )     (750,000 )     (406,180 )    
  Dividend payments     (17,136 )     (16,440 )     (52,578 )     (49,711 )    
  Payments of convertible debt principal     (9,713 )     (235,169 )     (52,005 )     (301,997 )    
  Payments related to net settlement of employee stock compensation awards     (207 )     (251 )     (32,987 )     (32,045 )    
  Issuance of common stock under stock purchase and stock option plans     12,197       9       28,733       32,590      
Net cash used for financing activities     (232,060 )     (461,447 )     (858,837 )     (757,343 )    
                           
Effects of exchange rate changes on cash and cash equivalents     (596 )           7,418       (489 )    
Increase (decrease) in cash and cash equivalents     138,723       125,013       (411,453 )     165,333      
Cash and cash equivalents at beginning of period     572,023       954,441       1,122,199       914,121      
Cash and cash equivalents at end of period   $ 710,746     $ 1,079,454     $ 710,746     $ 1,079,454      
                           

 

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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