Teradyne Inc. (NASDAQ:TER)

The financial data reveals several distinct trends related to the company's intangible assets and goodwill over the five-year period ending December 31, 2023.

Goodwill

Goodwill showed an initial increase from 416,431 thousand US dollars in 2019 to a peak of 453,859 thousand in 2020. Following this peak, it steadily declined to 426,024 thousand in 2021, further to 403,195 thousand in 2022, before slightly rising to 415,652 thousand in 2023.

Developed Technology

The gross carrying amount for developed technology decreased consistently throughout the period, dropping from 356,078 thousand US dollars in 2019 to 262,363 thousand in 2023. This steady decline indicates ongoing amortization and/or potential impairments without significant additions to the asset base.

Customer Relationships

Customer relationships also reflected a continuous decline, falling from 75,214 thousand US dollars in 2019 to 52,341 thousand in 2023. The reduction suggests that these intangible assets are being amortized and not replenished at the same rate.

Tradenames and Trademarks

Tradenames and trademarks remained relatively stable compared to other intangible assets, starting at 68,936 thousand US dollars in 2019, increasing slightly to 70,805 thousand in 2020, but then decreasing to 57,762 thousand by 2023.

Backlog

Backlog figures are only available for 2019, with a value of 260 thousand US dollars. The absence of reported backlog in subsequent years suggests a change in accounting policy or classification.

Intangible Assets – Gross Carrying Amount

The total gross carrying amount of intangible assets decreased steadily from 500,488 thousand US dollars in 2019 to 372,466 thousand in 2023. This trend aligns with the decreases seen in the individual intangible asset categories, indicating limited new intangibles being capitalized.

Accumulated Amortization

Accumulated amortization showed a consistent increase in absolute value (displayed as a negative number) from -375,008 thousand US dollars in 2019 to -337,062 thousand in 2023. The figures suggest growing amortization expenses over time that are reducing the net carrying amount of intangible assets.

Intangible Assets – Net Carrying Amount

The net carrying amount of intangible assets declined substantially from 125,480 thousand US dollars in 2019 to 35,404 thousand in 2023, reflecting the impact of amortization exceeding additions.

Goodwill and Intangible Assets Combined

The combined balance of goodwill and intangible assets initially rose from 541,911 thousand US dollars in 2019 to 554,798 thousand in 2020, followed by a consistent decline through 2023 reaching 451,056 thousand. This overall decrease after 2020 highlights the downward pressure from amortization and impairment on intangible asset balances.

In summary, the data indicates a period of stabilization in goodwill levels with some measured decline after 2020, alongside a clear and steady reduction in intangible assets' gross and net carrying amounts. The significant drop in net intangible assets underscores ongoing amortization without comparable asset replenishment. The absence of backlog data after 2019 may reflect changes in reporting practices. Overall, these trends suggest management has not actively expanded the intangible asset base recently, focusing instead on amortizing existing assets.

Total Assets

Reported total assets increased steadily from 2,787,014 thousand US dollars in 2019 to a peak of 3,809,425 thousand US dollars in 2021. Following this peak, there was a decline in 2022, with reported total assets decreasing to 3,501,252 thousand US dollars, and a slight further decrease in 2023 to 3,486,824 thousand US dollars. Adjusted total assets, which exclude goodwill, displayed a similar trend but consistently remained lower than the reported figures. Adjusted assets grew from 2,370,583 thousand US dollars in 2019 to their highest value of 3,383,401 thousand US dollars in 2021, then declined to 3,098,057 thousand in 2022 and 3,071,172 thousand in 2023.

Shareholders' Equity

Reported shareholders' equity showed a strong upward trajectory from 1,480,158 thousand US dollars in 2019 to 2,562,444 thousand US dollars in 2021. The trend reversed slightly during the next two years, dropping to 2,451,294 thousand US dollars in 2022, followed by a modest recovery to 2,525,897 thousand US dollars in 2023. Adjusted shareholders' equity, which removes the impact of goodwill, also increased substantially from 1,063,727 thousand US dollars in 2019 to 2,136,420 thousand US dollars in 2021 before declining in 2022 to 2,048,099 thousand US dollars and partially recovering to 2,110,245 thousand US dollars in 2023.

General Observations

The data reveal a growth phase through 2021 in both total assets and shareholders' equity, as observed in both reported and adjusted figures. This phase was followed by a contraction in 2022, which persisted into 2023 with smaller fluctuations. The adjustments for goodwill consistently reduce total assets and equity, indicating a notable goodwill component in the balance sheet. The parallel trends in adjusted and reported data suggest that changes in the core asset base and equity, excluding goodwill, significantly influenced the company's financial position during these years.

The analysis of the financial data over the five-year period reveals several significant trends in the company's operational efficiency and profitability as reflected through key ratios.

Total Asset Turnover

Both reported and adjusted total asset turnover ratios show an increasing trend from 2019 through 2021, indicating improved efficiency in utilizing assets to generate sales during this period. Specifically, the reported ratio increased from 0.82 to 0.97, while the adjusted ratio rose from 0.97 to 1.09. However, from 2022 onwards, both ratios declined, falling to 0.77 (reported) and 0.87 (adjusted) by the end of 2023, suggesting a reduction in asset utilization effectiveness in recent years.

Financial Leverage

The financial leverage ratios exhibit a consistent downward trend from 2019 to 2023, both in reported and adjusted terms. Reported leverage decreased from 1.88 to 1.38, and adjusted leverage from 2.23 to 1.46. This indicates a gradual reduction in the company’s use of debt relative to equity, reflecting a conservative shift in the capital structure with potentially lower financial risk.

Return on Equity (ROE)

ROE experienced growth from 2019 through 2021, reaching a peak in 2021 with reported and adjusted figures of 39.59% and 47.49%, respectively. Following this peak, a notable decline occurred in 2022 and 2023, with reported ROE dropping to 17.77% and adjusted ROE to 21.27%. This decline signals decreased profitability relative to shareholders’ equity during the latest two years.

Return on Assets (ROA)

ROA trends mirror those of ROE, showing improvement from 2019 to 2021, with reported ROA rising from 16.77% to 26.63% and adjusted ROA from 19.72% to 29.99%. The subsequent decline in 2022 and 2023 down to reported 12.87% and adjusted 14.61% underscores diminishing returns on asset investments recently.

Overall, the data indicates a period of strengthening operational efficiency and profitability up through 2021, followed by a reversal of these trends in the subsequent years. Declining asset turnover and returns alongside reduced financial leverage suggest a more conservative financial approach accompanied by challenges in maintaining the previous levels of profitability and asset efficiency.

Total Assets

The reported total assets show an increasing trend from 2,787,014 thousand US dollars in 2019 to a peak of 3,809,425 thousand US dollars in 2021, followed by a decline to approximately 3,486,824 thousand US dollars by the end of 2023. A similar pattern is observed in the adjusted total assets, which rise from 2,370,583 thousand US dollars in 2019 to 3,383,401 thousand US dollars in 2021 and then decrease to 3,071,172 thousand US dollars in 2023. Overall, asset base growth moderated after 2021, with a noticeable reduction over the last two years.

Total Asset Turnover

Reported total asset turnover exhibits a rising trend from 0.82 in 2019 to a peak of 0.97 in 2021, indicating improving efficiency in the use of assets to generate sales during this period. However, it declines to 0.77 by 2023, suggesting decreased asset utilization or sales relative to assets. The adjusted total asset turnover, which accounts for goodwill adjustments, follows a similar pattern but at consistently higher levels, starting at 0.97 in 2019, peaking at 1.09 in 2021, and decreasing to 0.87 in 2023. This indicates that excluding goodwill provides a perspective of better asset efficiency, despite the recent downward trend.

Insights

The overall data reveals that growth and efficiency improvements peaked around 2021. The subsequent decline in both total assets and asset turnover ratios suggests a possible contraction in asset base or sales performance. The adjustment for goodwill consistently presents a more favorable view of asset utilization, highlighting the impact of intangible assets on reported figures. The downward trend post-2021 may merit further analysis to understand operational or market challenges impacting asset use and sales generation.

The analysis of the financial data over the five-year period reveals several notable trends in the company's reported and goodwill adjusted figures.

Total Assets

Reported total assets increased significantly from 2,787,014 thousand US dollars in 2019 to a peak of 3,809,425 thousand US dollars in 2021, followed by a decline to 3,486,824 thousand US dollars in 2023. Adjusted total assets, which exclude goodwill, followed a similar pattern with an increase from 2,370,583 thousand US dollars in 2019 to 3,383,401 thousand US dollars in 2021, then decreased to 3,071,172 thousand US dollars by 2023. This indicates an overall expansion in asset base until 2021 and a contraction afterward.

Shareholders’ Equity

Reported shareholders’ equity showed consistent growth over the period, rising from 1,480,158 thousand US dollars in 2019 to 2,525,897 thousand US dollars in 2023. Adjusted shareholders’ equity also increased steadily from 1,063,727 thousand US dollars in 2019 to 2,110,245 thousand US dollars in 2023. The steady increase in equity reflects strengthening financial position and accumulation of retained earnings, with both reported and adjusted figures displaying similar growth trajectories.

Financial Leverage

Reported financial leverage ratio experienced a declining trend from 1.88 in 2019 to 1.38 in 2023, demonstrating a gradual reduction in the use of debt relative to equity. The adjusted financial leverage ratio, higher in magnitude due to exclusion of goodwill from equity, also declined from 2.23 in 2019 to 1.46 in 2023. This decline suggests improved capitalization and lower financial risk over time.

Overall, the company showed asset growth and equity strengthening until 2021, followed by a moderate decrease in assets but continued equity growth through 2023. The reduction in financial leverage ratios, both reported and adjusted, indicates a strategic move toward less reliance on debt financing and a more robust capital structure.

The analysis of the financial data reveals discernible trends in shareholder equity and return on equity (ROE), both reported and adjusted for goodwill, over the five-year period from 2019 to 2023.

Shareholders’ Equity

Reported shareholders' equity demonstrated an overall upward trend from 2019 through 2021, increasing from approximately $1.48 billion to about $2.56 billion. However, there was a slight decline in 2022 to roughly $2.45 billion, followed by a modest recovery in 2023 to nearly $2.53 billion.

Adjusted shareholders’ equity, which accounts for goodwill, exhibited a similar pattern, starting at $1.06 billion in 2019 and rising steadily to $2.14 billion in 2021. This figure then decreased to $2.05 billion in 2022 before increasing slightly to $2.11 billion in 2023. The adjustment for goodwill consistently results in lower equity figures than the reported numbers, reflecting the impact of intangible assets exclusion on the equity base.

Return on Equity (ROE)

The reported ROE showed a robust performance from 2019 to 2021, peaking close to 40% in 2021. A notable decline followed, falling to 29.19% in 2022 and further dropping to 17.77% in 2023. This indicates a significant reduction in profitability relative to shareholder equity during the latter years.

Adjusted ROE, which excludes goodwill effects, was higher than the reported ROE throughout the period, starting at 43.95% in 2019 and reaching nearly 47.5% in 2021. Similar to the reported ROE, a decline occurred in 2022 to 34.93%, continuing downward to 21.27% in 2023. This suggests that despite the adjustment, profitability relative to tangible equity also worsened over time.

Insights

Both reported and adjusted shareholders' equity increased substantially from 2019 to 2021, signifying growth in the company's equity base. However, the subsequent decrease in 2022 followed by a modest rebound in 2023 hints at some financial pressures or other factors affecting equity.

The strong ROE up to 2021 indicates effective use of equity to generate profits. The marked decline in ROE after 2021, despite relatively stable equity levels, points to lower net income generation or less efficient utilization of equity in recent years.

The consistently higher adjusted ROE compared to reported ROE underscores the impact of goodwill on equity. The declining trend in adjusted ROE implies challenges in generating returns from the tangible assets excluding intangible considerations.

The financial data reveals notable trends in total assets and return on assets (ROA) for the company over the five-year period ending in 2023.

Total Assets

The reported total assets increased consistently from 2,787,014 thousand US dollars in 2019 to a peak of 3,809,425 thousand US dollars in 2021. Following this peak, reported total assets declined to 3,501,252 thousand in 2022 and further slightly to 3,486,824 thousand in 2023. A similar pattern is observed in the goodwill adjusted total assets, which rose from 2,370,583 thousand in 2019 to 3,383,401 thousand in 2021 before decreasing in the subsequent two years to 3,090,057 thousand in 2022 and 3,071,172 thousand in 2023. Overall, this indicates a growth trend until 2021 followed by a gradual reduction in total asset levels over the last two years.

Return on Assets (ROA)

The reported ROA shows an upward trajectory from 16.77% in 2019 to a high of 26.63% in 2021, indicating improving profitability relative to reported asset base during that period. However, the ROA declined thereafter to 20.44% in 2022 and further to 12.87% in 2023, reflecting a reduction in asset efficiency or profitability in the latter years. Adjusted ROA, which factors out goodwill, follows a similar pattern but consistently registers higher values than reported ROA. It rose from 19.72% in 2019 to a peak of 29.99% in 2021, then declined to 23.1% in 2022 and 14.61% in 2023. The higher adjusted ROA suggests that excluding goodwill adjustments provides a more favorable view of asset returns.

In summary, the data illustrates strong asset growth and improving profitability up to 2021, followed by a contraction in asset base and a significant decrease in ROA values in the subsequent two years. The adjusted figures imply that goodwill has a measurable impact on the reported metrics but the overall trend remains consistent across reported and adjusted data.