Teradyne 10-Q 2023-10-01

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 1, 2023

OR

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File No. 001-06462

TERADYNE, INC.

(Exact name of registrant as specified in its charter)

Massachusetts	04-2272148
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
600 Riverpark Drive**,** North Reading**,** Massachusetts	01864
(Address of Principal Executive Offices)	(Zip Code)

978**-**370-2700

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock**, par value $0.125** per share		TER		Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files) Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act (check one):

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Emerging growth company	☐
Smaller reporting company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the registrant’s only class of Common Stock as of October 30, 2023, was 152,878,728 shares.

TERADYNE, INC.

INDEX

		Page No.
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited):	1
	Condensed Consolidated Balance Sheets as of October 1, 2023 and December 31, 2022	1
	Condensed Consolidated Statements of Operations for the Three and Nine Months ended October 1, 2023 and October 2, 2022	2
	Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months ended October 1, 2023 and October 2, 2022	3
	Condensed Statements of Convertible Common Shares and Shareholders’ Equity for the Three and Nine Months Ended October 1, 2023 and October 2, 2022	4
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended October 1, 2023 and October 2, 2022	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	37
Item 4.	Controls and Procedures	38
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	39
Item 1A.	Risk Factors	39
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41
Item 4.	Mine Safety Disclosures	41
Item 5.	Other Information	41
Item 6.	Exhibits	42

PART I

TERADYNE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

		October 1, 2023				December 31, 2022
		(in thousands, except per share amount)
ASSETS
Current assets:
Cash and cash equivalents		$	636,961			$	854,773
Marketable securities			79,570				39,612
Accounts receivable, less allowance for credit losses of $2,191 and $1,955 at October 1, 2023 and December 31, 2022, respectively			455,878				491,145
Inventories, net			322,632				325,019
Prepayments			593,366				532,962
Other current assets			10,952				14,404
Total current assets			2,099,359				2,257,915
Property, plant and equipment, net			436,449				418,683
Operating lease right-of-use assets, net			78,978				73,734
Marketable securities			103,911				110,777
Deferred tax assets			162,669				142,784
Retirement plans assets			11,403				11,761
Other assets			37,581				28,925
Acquired intangible assets, net			39,165				53,478
Goodwill			401,140				403,195
Total assets		$	3,370,655			$	3,501,252
LIABILITIES
Current liabilities:
Accounts payable		$	176,117			$	139,722
Accrued employees’ compensation and withholdings			155,246				212,266
Deferred revenue and customer advances			109,445				148,285
Other accrued liabilities			122,609				112,271
Operating lease liabilities			18,026				18,594
Income taxes payable			35,687				65,010
Current debt			23,529				50,115
Total current liabilities			640,659				746,263
Retirement plans liabilities			123,244				116,005
Long-term deferred revenue and customer advances			34,405				45,131
Long-term other accrued liabilities			17,114				15,981
Deferred tax liabilities			238				3,267
Long-term operating lease liabilities			69,364				64,176
Long-term incomes taxes payable			44,331				59,135
Total liabilities			929,355				1,049,958
Commitments and contingencies (Note P)
SHAREHOLDERS’ EQUITY
Common stock, $0.125 par value, 1,000,000 shares authorized; 153,235 and 155,759 shares issued and outstanding at October 1, 2023 and December 31, 2022, respectively			19,154				19,470
Additional paid-in capital			1,816,137				1,755,963
Accumulated other comprehensive loss			(47,928	)			(49,868	)
Retained earnings			653,937				725,729
Total shareholders’ equity			2,441,300				2,451,294
Total liabilities and shareholders’ equity		$	3,370,655			$	3,501,252

The accompanying notes, together with the Notes to Consolidated Financial Statements included in Teradyne’s Annual Report on Form 10-K for the year ended December 31, 2022, are an integral part of the condensed consolidated financial statements.

TERADYNE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

		For the Three Months Ended								For the Nine Months Ended
		October 1, 2023				October 2, 2022				October 1, 2023				October 2, 2022
		(in thousands, except per share amount)
Revenues:
Products		$	551,982			$	676,252			$	1,565,776			$	2,000,081
Services			151,750				150,821				439,923				423,128
Total revenues			703,732				827,073				2,005,699				2,423,209
Cost of revenues:
Cost of products			239,827				277,539				655,502				795,229
Cost of services			65,614				64,155				192,993				181,279
Total cost of revenues (exclusive of acquired intangible assets amortization shown separately below)			305,441				341,694				848,495				976,508
Gross profit			398,291				485,379				1,157,204				1,446,701
Operating expenses:
Selling and administrative			138,330				135,632				434,979				415,351
Engineering and development			104,413				111,715				315,881				331,781
Acquired intangible assets amortization			4,720				4,729				14,348				14,663
Restructuring and other			6,856				1,796				15,251				19,554
Total operating expenses			254,319				253,872				780,459				781,349
Income from operations			143,972				231,507				376,745				665,352
Non-operating (income) expense:
Interest income			(6,873	)			(1,318	)			(18,486	)			(2,972	)
Interest expense			963				779				2,994				2,704
Other (income) expense, net			5,602				5,849				6,470				20,472
Income before income taxes			144,280				226,197				385,767				645,148
Income tax provision			16,164				42,712				54,069				101,948
Net income		$	128,116			$	183,485			$	331,698			$	543,200
Net income per common share:
Basic		$	0.83			$	1.17			$	2.14			$	3.41
Diluted		$	0.78			$	1.10			$	2.01			$	3.17
Weighted average common shares—basic			153,762				156,364				154,809				159,325
Weighted average common shares—diluted			164,050				166,733				165,037				171,156

The accompanying notes, together with the Notes to Consolidated Financial Statements included in Teradyne’s Annual Report on Form 10-K for the year ended December 31, 2022, are an integral part of the condensed consolidated financial statements.

TERADYNE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

		For the Three Months Ended								For the Nine Months Ended
		October 1, 2023				October 2, 2022				October 1, 2023				October 2, 2022
		(in thousands)
Net income		$	128,116			$	183,485			$	331,698			$	543,200
Other comprehensive income, net of tax:
Foreign currency translation adjustment, net of ta

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Statements in this Quarterly Report on Form 10-Q which are not historical facts, so called “forward-looking statements,” are made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended. Investors are cautioned that all forward-looking statements involve risks and uncertainties, including those detailed in our filings with the Securities and Exchange Commission. See also Part II, Item 1A of this Quarterly Report on Form 10-Q and Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022. Readers are cautioned not to place undue reliance on these forward-looking statements which reflect management’s analysis only as of the date hereof. We assume no obligation to update these forward-looking statements to reflect actual results or changes in factors or assumptions affecting forward-looking statements, except as may be required by law.

Overview

We are a leading global supplier of automated test equipment and robotics solutions. We design, develop, manufacture and sell automatic test systems and robotics products. Our automatic test systems are used to test semiconductors, wireless products, data storage and complex electronics systems in many industries including the consumer electronics, wireless, automotive, industrial, computing, communications, and aerospace and defense industries. Our robotics products include collaborative robotic arms and autonomous mobile robots (“AMRs”) used by global manufacturing, logistics and industrial customers to improve quality, increase manufacturing and material handling efficiency and decrease manufacturing and logistics costs. Our automatic test equipment and robotics products and services include:

semiconductor test (“Semiconductor Test”) systems;

storage and system level test (“Storage Test”) systems, defense/aerospace (“Defense/Aerospace”) test instrumentation and systems, and circuit-board test and inspection (“Production Board Test”) systems (collectively these products represent “System Test”);

wireless test (“Wireless Test”) systems; and

robotics (“Robotics”) products.

The market for our test products is concentrated with a limited number of significant customers accounting for a substantial portion of the purchases of test equipment. A few customers drive significant demand for our test products both through direct sales and sales to the customers’ supply partners. We expect that sales of our test products will continue to be concentrated with a limited number of significant customers for the foreseeable future.

In the third quarter of 2023, the demand in our Semiconductor Test business continued to be impacted by a correction cycle driven by excess semiconductor inventory, primarily in the mobility segment of the market. The depth of this slowdown and the timing of the recovery are uncertain, however, strong automotive and image sensor demand partially offset these declines. The growth of DDR5 and High Bandwidth Memory ("HBM") devices for data center applications continue to drive demand for our products in the memory market. Over the midterm we expect the ramp of 3 nanometer and gate-all-around process technology, increasing multichip packaging, additional device complexity and unit growth will drive additional demand for test.

Our Robotics segment consists of Universal Robots A/S (“UR”), a leading supplier of collaborative robotic arms and Mobile Industrial Robots A/S (“MiR”), a leading maker of AMRs for industrial automation. The market for our Robotics segment products is dependent on the adoption of new automation technologies by large manufacturers as well as small and medium enterprises (“SMEs”) throughout the world. In the third quarter of 2023, Robotics demand stabilized after softening in the first half of 2023 .

In the third quarter of 2023, Robotics and Semiconductor Test shipments came in above our plan. While both our test and robotics businesses could still be impacted by supply constraints, our fourth quarter 2023 forecast does not exclude any revenue due to supply chain constraints.

Our financial statements are denominated in U.S. dollars. While the majority of our revenues are in U.S. dollars, approximately 70 percent of our Robotics revenue is denominated in foreign currencies. In 2022, the strengthening of the U.S. dollar was a factor in lower than forecasted revenues in our Robotics segment. Strengthening of the U.S. dollar would negatively affect Robotics revenue growth in 2023.

Our corporate strategy continues to focus on profitably gaining market share in our test businesses through the introduction of differentiated products that target expanding segments and accelerating growth through continued investment in our Robotics businesses. We plan to execute on our strategy while balancing capital allocations between returning capital to our shareholders through stock repurchases and dividends and using capital for opportunistic accretive acquisitions.

Impact of the Israel-Hamas conflict on our Business

The recent Israel-Hamas conflict could have a negative impact on our future revenue and supply chain, either of which could adversely affect our business and financial results. Our customers in Israel may experience delays in product releases due to impacts to their labor force and impacts on their suppliers because of the conflict, which could materially impact demand for our products. Similarly, our suppliers in Israel may experience delays in providing us with parts due to the conflict. In addition, the global economic uncertainty following the start of the conflict could impact demand for our products.

Supply Chain Constraints and Inflationary Pressures

The global supply shortage of electrical components, including semiconductor chips, impacted our supply chain in the first half of 2023. In the third quarter of 2023, we saw improvements related to supply constraints and, consequently, did not experience material increases in our lead times and costs for components. In addition, while not material, inflationary pressures contributed to increased costs for product components and wage inflation, impacting our cost of products, gross margin and profit for the quarter. Our supply chain team, and our suppliers, continue to manage numerous supply, production, and logistics obstacles. While not material through the third quarter of 2023, in an effort to mitigate these risks, in some cases, we have incurred higher costs due to investment in supply chain resiliency and to secure available inventory or have extended or placed non-cancellable purchase commitments with semiconductor suppliers, which introduces inventory risk if our forecasts and assumptions prove inaccurate. We have also sourced components from additional suppliers and multi-sourced and pre-ordered components and finished goods inventory in some cases in an effort to reduce the impact of the adverse supply chain conditions we have experienced. There is no assurance that these efforts will be successful. While our businesses could still be impacted by supply constraints in the future, our fourth quarter 2023 forecast does not exclude any revenue due to supply chain constraints.

See Part II—Item 1A, “Risk Factors,” included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 for our risk factors regarding risks associated with both the supply chain constraints and international conflicts.

Critical Accounting Policies and Estimates

We have identified the policies which are critical to understanding our business and our results of operations. There have been no significant changes during the nine months ended October 1, 2023, to the items disclosed as our critical accounting policies and estimates in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, except as noted below.

Critical accounting estimates are complex and may require significant judgment by management. Changes to the underlying assumptions may have a material impact on our financial condition and results of operations. These estimates may change, as new events occur and additional information is obtained. Actual results could differ significantly from these estimates under different assumptions or conditions.

Preparation of Financial Statements and Use of Estimates

The preparation of consolidated financial statements requires management to make estimates and judgments that affect the amounts reported in the financial statements. Actual results may differ significantly from these estimates under different assumptions or conditions.

SELECTED RELATIONSHIPS WITHIN THE CONDENSED CONSOLIDATED

STATEMENTS OF OPERATIONS

		For the Three Months Ended								For the Nine Months Ended
		October 1, 2023				October 2, 2022				October 1, 2023				October 2, 2022
Percentage of revenues:
Revenues:
Products			78	%			82	%			78	%			83	%
Services			22				18				22				17
Total revenues			100				100				100				100
Cost of revenues:
Cost of products			34				34				33				33
Cost of services			9				8				10				7
Total cost of revenues (exclusive of acquired intangible assets amortization shown separately below)			43				41				42				40
Gross profit			57				59				58				60
Operating expenses:
Selling and administrative			20				16				22				17
Engineering and development			15				14				16				14
Acquired intangible assets amortization			1				1				1				1
Restructuring and other			1				—				1				1
Total operating expenses			36				31				39				32
Income from operations			20				28				19				27
Non-operating (income) expense:
Interest income			(1	)			—				(1	)			—
Interest expense			—				—				—				—
Other (income) expense, net			1				1				—				1
Income before income taxes			21				27				19				27
Income tax provision			2				5				3				4
Net income			18	%			22	%			17	%			22	%

Results of Operations

Third Quarter 2023 Compared to Third Quarter 2022

Revenues

Revenues by our reportable segments were as follows:

		For the Three Months Ended
		October 1, 2023				October 2, 2022				Dollar Change
		(in millions)
Semiconductor Test		$	497.9			$	575.7			$	(77.8	)
System Test			83.2				116.2				(33.0	)
Robotics			85.7				89.1				(3.4	)
Wireless Test			37.0				46.1				(9.1	)
		$	703.7			$	827.1			$	(123.4	)

The decrease in Semiconductor Test revenues of $77.8 million, or 13.5%, was driven primarily by lower tester sales for compute and industrial applications and Memory Test sales in DRAM wafer sort and Flash Final Test. The decrease in System Test revenues of $33.0 million, or 28.4%, was primarily due to lower sales in Storage Test of system level and hard disk drive testers, partially offset by higher sales in Defense/Aerospace. The decrease in Robotics revenues of $3.4 million, or 3.8%, was driven primarily by softening demand due to slowing global industrial activity and macro-economic headwinds, and the impact of the transformation of Universal Robots sales channel. The decrease in Wireless Test revenues of $9.1 million, or 19.7% was primarily due to a decrease in connectivity test products.

Revenues by country as a percentage of total revenues were as follows (1):

		For the Three Months Ended
		October 1, 2023				October 2, 2022
Korea			15	%			18	%
Japan			15				4
Taiwan			14				23
United States			13				14
China			12				16
Europe			9				7
Philippines			8				5
Singapore			4				3
Malaysia			3				4
Thailand			3				4
Rest of World			4				2
			100	%			100	%

(1)

Revenues attributable to a country are based on location of customer site.

Gross Profit

Our gross profit was as follows:

		For the Three Months Ended
		October 1, 2023				October 2, 2022				Dollar/Point Change
		(in millions)
Gross profit		$	398.3			$	485.4			$	(87.1	)
Percent of total revenues			56.6	%			58.7	%			(2.1	)

Gross profit as a percent of revenue decreased by 2.1 points, primarily due to product mix, spending to strengthen our supply chain, and lower volume.

Selling and Administrative

Selling and administrative expenses were as follows:

		For the Three Months Ended
		October 1, 2023				October 2, 2022				Dollar Change
		(in millions)
Selling and administrative		$	138.3			$	135.6			$	2.7
Percent of total revenues			19.7	%			16.4	%

The increase of $2.7 million in selling and administrative expenses was primarily due to higher spending in Robotics, partially offset by lower variable compensation.

Engineering and Development

Engineering and development expenses were as follows:

		For the Three Months Ended
		October 1, 2023				October 2, 2022				Dollar Change
		(in millions)
Engineering and development		$	104.4			$	111.7			$	(7.3	)
Percent of total revenues			14.8	%			13.5	%

The decrease of $7.3 million in engineering and development expenses was primarily due to lower spending in Semiconductor Test and lower variable compensation, partially offset by higher spending in Robotics.

Restructuring and Other

During the three months ended October 1, 2023, we recorded $4.7 million of severance charges related to headcount reductions of 94 people primarily in Semiconductor Test and Robotics, which included charges related to a voluntary early retirement program for employees meeting certain conditions, and a $1.5 million contract termination charge.

During the three months ended October 2, 2022, we recorded $1.2 million of severance charges primarily in Robotics, and a charge of $0.7 million for an increase in legal liabilities.

Interest and Other

		For the Three Months Ended
		October 1, 2023				October 2, 2022				Dollar Change
		(in millions)
Interest income		$	(6.9	)		$	(1.3	)		$	(5.6	)
Interest expense			1.0				0.8			$	0.2
Other (income) expense, net			5.6				5.8			$	(0.2	)

Interest income increased by $5.6 million primarily due to higher interest rates in 2023.

Income (Loss) Before Income Taxes

		For the Three Months Ended
		October 1, 2023				October 2, 2022				Dollar Change
		(in millions)
Semiconductor Test		$	136.5			$	182.6			$	(46.1	)
System Test			23.8				40.2				(16.4	)
Wireless Test			9.5				12.6				(3.1	)
Robotics			(21.8	)			(4.0	)			(17.8	)
Corporate and Eliminations (1)			(3.6	)			(5.3	)			1.7
		$	144.3			$	226.2			$	(81.9	)

(1)

Included in Corporate and Eliminations are interest income, interest expense, net foreign exchange gains (losses), intercompany eliminations, legal and environmental fees, contract termination settlement charge and severance charges.

The decrease in income before income taxes in Semiconductor Test was driven primarily by lower tester sales for compute and industrial applications, and Memory Test sales in DRAM wafer sort and flash final test. The decrease in income before income taxes in System Test was primarily due to lower sales in Storage Test of system level and hard disk drive testers. The decrease in income before income taxes in Wireless Test was driven primarily by a decrease in sales of connectivity test products. The decrease in income before income taxes in Robotics was driven primarily by softening demand due to slowing global industrial activity and macro-economic headwinds, the impact of the transformation of Universal Robots sales channel and product mix. The loss before income taxes in Corporate and Eliminations was primarily due to changes in unrealized gains/losses on equity securities.

Income Taxes

The effective tax rate for the three months ended October 1, 2023 and October 2, 2022, was 11.2% and 18.9%, respectively. The decrease in the effective tax rate from the three months ended October 2, 2022, to three months ended October 1, 2023, primarily resulted from an increase in benefit related to tax credits and an increase in benefit related to the international provisions of the U.S. Tax Cuts and Jobs Act of 2017. These decreases were partially offset by an increase in discrete expense related to foreign currency gain or loss.

Nine Months 2023 Compared to Nine Months 2022

Revenues

Revenues by our reportable segments were as follows:

		For the Nine Months Ended
		October 1, 2023				October 2, 2022				Dollar Change
		(in millions)
Semiconductor Test		$	1,387.6			$	1,599.4			$	(211.8	)
System Test			252.1				369.5				(117.4	)
Robotics			246.5				292.8				(46.3	)
Wireless Test			119.5				161.5				(42.0	)
		$	2,005.7			$	2,423.2			$	(417.5	)

The decrease in Semiconductor Test revenues of $211.8 million or 13.2%, was driven primarily by lower tester sales for mobility and compute applications. The decrease in System Test revenues of $117.4 million, or 31.8%, was primarily due to lower sales in Storage Test of system level and hard disk drive testers. The decrease in Robotics revenues of $46.3 million, or 15.8%, was driven primarily by softening demand due to slowing global industrial activity and macro-economic headwinds and the impact of the transformation of Universal Robots sales channel. The decrease in Wireless Test revenues of $42.0 million, or 26.0%, was primarily due to a decrease in sales of connectivity test products.

Revenues by country as a percentage of total revenues were as follows (1):

		For the Nine Months Ended
		October 1, 2023				October 2, 2022
United States			16	%			14	%
Taiwan			15				22
Korea			14				16
Japan			12				5
China			12				16
Europe			10				8
Philippines			6				3
Singapore			5				3
Malaysia			4				5
Thailand			3				5
Rest of World			3				3
			100	%			100	%

(1)

Revenues attributable to a country are based on location of customer site.

Gross Profit

Our gross profit was as follows:

		For the Nine Months Ended
		October 1, 2023				October 2, 2022				Dollar/Point Change
		(in millions)
Gross profit		$	1,157.2			$	1,446.7			$	(289.5	)
Percent of total revenues			57.7	%			59.7	%			(2.0	)

Gross profit as a percent of revenue decreased by 2.0 points, primarily due to a lower volume, spending to strengthen our supply chain, and product mix.

Selling and Administrative

Selling and administrative expenses were as follows:

		For the Nine Months Ended
		October 1, 2023				October 2, 2022				Dollar Change
		(in millions)
Selling and administrative		$	435.0			$	415.4			$	19.6
Percent of total revenues			21.7	%			17.1	%

The increase of $19.6 million in selling and administrative expenses was primarily due to the charge of $5.9 million recorded in the nine months ended October 1, 2023, related to the modification of Teradyne’s chief executive officer’s outstanding equity awards in connection with his retirement and higher spending in Robotics, System Test, and Semiconductor Test.

Engineering and Development

Engineering and development expenses were as follows:

		For the Nine Months Ended
		October 1, 2023				October 2, 2022				Dollar Change
		(in millions)
Engineering and development		$	315.9			$	331.8			$	(15.9	)
Percent of total revenues			15.7	%			13.7	%

The decrease of $15.9 million in engineering and development expenses was due to lower variable compensation and lower spending in Semiconductor Test, partially offset by higher spending in Robotics.

Restructuring and Other

During the nine months ended October 1, 2023, we recorded $11.8 million of severance charges related to headcount reductions of 197 people primarily in Semiconductor Test and Robotics, which included charges related to a voluntary early retirement program for employees meeting certain conditions, a $1.5 million contract termination charge, and a charge of $1.1 million for an increase in environmental liability.

During the nine months ended October 2, 2022, we recorded a charge of $14.7 million related to the arbitration claim filed against Teradyne and AutoGuide related to an earn-out dispute, which was settled on March 25, 2022 for $26.7 million, a charge of $2.7 million for an increase in environmental and legal liabilities, and $2.1 million of severance charges primarily in Robotics.

Interest and Other

		For the Nine Months Ended
		October 1, 2023				October 2, 2022				Dollar Change
		(in millions)
Interest income		$	(18.5	)		$	(3.0	)		$	(15.5	)
Interest expense			3.0				2.7				0.3
Other (income) expense, net			6.5				20.5				(14.0	)

Interest income increased by $15.5 million primarily due to higher interest rates in 2023. Other (income) expense, net decreased by $14.0 million primarily due to changes in unrealized gains/losses on equity securities, from an $11.1 million loss in 2022 to a $2.9 million gain in 2023.

Income (Loss) Before Income Taxes

		For the Nine Months Ended
		October 1, 2023				October 2, 2022				Dollar Change
		(in millions)
Semiconductor Test		$	361.7			$	510.1			$	(148.4	)
System Test			67.6				135.6				(68.0	)
Wireless Test			30.8				56.7				(25.9	)
Robotics			(66.7	)			(15.5	)			(51.2	)
Corporate and Eliminations (1)			(7.7	)			(41.7	)			34.0
		$	385.8			$	645.1			$	(259.3	)

(1)

Included in Corporate and Eliminations are interest income, interest expense, net foreign exchange gains (losses), intercompany eliminations, legal and environmental fees, severance charges, pension, contract termination settlement charge and an expense for the modification of Teradyne’s former chief executive officer’s outstanding equity awards.

The decrease in income before income taxes in Semiconductor Test was driven primarily by lower tester sales for mobility and compute applications. The decrease in income before income taxes in System Test was primarily due to lower sales in Storage Test of system level and hard disk drive testers. The decrease in income before income taxes in Wireless Test was driven primarily by a decrease in sales of connectivity test products. The decrease in income before income taxes in Robotics was driven primarily by softening demand due to slowing global industrial activity and macro-economic headwinds and the impact of the transformation of Universal Robots sales channel. The decrease in loss before income taxes in Corporate and Eliminations was primarily due to legal settlement charges in 2022 related to litigation for the earn-out dispute in connection with the AutoGuide acquisition, changes in unrealized gains/losses on equity securities and higher interest income.

Income Taxes

The effective tax rate for the nine months ended October 1, 2023 and October 2, 2022, was 14.0% and 15.8%, respectively. The decrease in the effective tax rate from the nine months ended October 1, 2023, to the nine months ended October 2, 2022, primarily resulted from an increase in benefit related to tax credits and an increase in benefit related to the international provisions of the U.S. Tax Cuts and Jobs Act of 2017. These decreases were partially offset by a projected shift in the geographic distribution of income, which increases the income subject to taxation in higher tax rate jurisdictions relative to lower tax rate jurisdictions and a reduction in discrete benefit from equity compensation.

Contractual Obligations

There have been no changes outside of the ordinary course of business to our contractual obligations as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022.

Liquidity and Capital Resources

Our cash, cash equivalents and marketable securities balances decreased by $184.7 million in the nine months ended October 1, 2023, to $820.4 million.

Operating activities during the nine months ended October 1, 2023, provided cash of $336.5 million. Changes in operating assets and liabilities used cash of $119.3 million due to a $27.4 million increase in operating assets and a $91.9 million decrease in operating liabilities.

The increase in operating assets was primarily due to a $64.0 million increase in prepayments and other assets due to prepayments to our contract manufacturers, partially offset by a $30.2 million decrease in accounts receivable and a $6.4 million decrease in inventories.

The decrease in operating liabilities was due to a $56.6 million decrease in accrued employee compensation, a $49.5 million decrease in deferred revenue and customer advance payments, a $42.7 million decrease in income taxes, and $3.7 million of retirement plan contributions, partially offset by a $36.0 million increase in accounts payable, and a $24.5 million increase in other accrued liabilities.

Investing activities during the nine months ended October 1, 2023, used cash of $149.2 million due to $137.8 million used for purchases of marketable securities, $115.3 million used for purchases of property, plant and equipment, and $5.0 million used for issuance of convertible loan, partially offset by $37.0 million and $71.4 million in proceeds from sales and maturities of marketable securities, respectively, and $0.5 million in proceeds from the cancellation of Teradyne owned life insurance policies related to the cash surrender value.

Financing activities during the nine months ended October 1, 2023, used cash of $410.8 million due to $346.5 million used for the repurchase of 3.4 million shares of common stock at an average price of $103.89 per share, $51.1 million used for dividend payments, $26.7 million used for payments of convertible debt principal, and $20.6 million used for payment related to net settlements of employee stock compensation awards, partially offset by $34.1 million from the issuance of common stock under employee stock purchase and stock option plans.

Operating activities during the nine months ended October 2, 2022, provided cash of $394.5 million. Changes in operating assets and liabilities used cash of $271.7 million. This was due to a $158.9 million increase in operating assets and a $112.8 million decrease in operating liabilities.

The increase in operating assets was due to a $94.3 million increase in prepayments and other assets due to prepayments to our contract manufacturers, a $68.8 million increase in inventories, partially offset by a $4.2 million decrease in accounts receivable.

The decrease in operating liabilities was due to a $82.9 million decrease in accrued employee compensation, a $31.4 million decrease in income taxes, a $7.5 million decrease in other accrued liabilities, a $5.9 million decrease in deferred revenue and customer advance payments and $3.9 million of retirement plan contributions, partially offset by an $18.7 million increase in accounts payable.

Investing activities during the nine months ended October 2, 2022 provided cash of $45.4 million due to $259.2 million and $182.1 million in proceeds from sales and maturities of marketable securities, respectively, partially offset by $267.2 million used for purchases of marketable securities, and $128.7 million used for purchases of property, plant and equipment.

Financing activities during the nine months ended October 2, 2022 used cash of $858.8 million due to $750.0 million used for the repurchase of 7.2 million shares of common stock at an average price of $103.83 per share, $52.6 million used for dividend payments, $52.0 million used for payments of convertible debt principal, and $33.0 million used for payment related to net settlements of employee stock compensation awards, partially offset by $28.7 million from the issuance of common stock under employee stock purchase and stock option plans.

In January 2023, May 2023, and August 2023, Teradyne’s Board of Directors declared a quarterly cash dividend of $0.11 per share. Dividend payments for the three and nine months ended October 1, 2023, were $16.9 million and $51.1 million, respectively.

In January 2022, May 2022, and August 2022, Teradyne’s Board of Directors declared a quarterly cash dividend to $0.11 per share. Dividend payments for the three and nine months ended October 2, 2022, were $17.1 million and $52.6 million, respectively.

In January 2023, our Board of Directors cancelled the 2021 repurchase program and approved a new repurchase program for up to $2.0 billion of common stock. We intend to repurchase up to $500.0 million of common stock in 2023 subject to market conditions.

During the nine months ended October 1, 2023, we repurchased 3.4 million shares of common stock for $346.5 million, which excludes related excise tax, at an average price of $103.89 per share. During the nine months ended October 2, 2022 , we repurchased 7.2 million shares of common stock for $750.0 million at an average price of $103.83 per share.

While we declared a quarterly cash dividend and authorized a share repurchase program, we may reduce or eliminate the cash dividend or share repurchase program in the future. Future cash dividends and stock repurchases are subject to the discretion of our Board of Directors, which will consider, among other things, our earnings, capital requirements and financial condition.

On May 1, 2020, we entered into a credit agreement providing a three-year, senior secured revolving credit facility of $400 million. On December 10, 2021, the credit agreement was amended to extend the senior secured revolving credit facility to December 10, 2026. On October 5, 2022, the credit agreement was amended to increase the amount of the credit facility to $750.0 million from $400.0 million. As of November 3, 2023, we have not borrowed any funds under the credit facility.

We believe our cash, cash equivalents, marketable securities and senior secured revolving credit facility will be sufficient to pay our quarterly dividend and meet our working capital and expenditure needs for at least the next twelve months. Inflation has not had a significant long-term impact on earnings.

Equity Compensation Plans

In addition to our 1996 Employee Stock Purchase Program as discussed in Note Q: “Stock-Based Compensation” in our 2022 Annual Report on Form 10-K, we have a 2006 Equity and Cash Compensation Incentive Plan (the “2006 Equity Plan”).

The purpose of the 1996 Employee Stock Purchase Plan is to encourage stock ownership by all eligible employees of Teradyne. The purpose of the 2006 Equity Plan is to provide equity ownership and compensation opportunities in Teradyne to our employees, officers and directors. Both plans were approved by our shareholders.

Recently Issued Accounting Pronouncements

For the nine months ended October 1, 2023, there were no recently issued accounting pronouncements that had, or are expected to have, a material impact to our consolidated financial statements.

For “Quantitative and Qualitative Disclosures about Market Risk” affecting Teradyne, see Part 2 Item 7A, “Quantitative and Qualitative Disclosures about Market Risks,” in our Annual Report on Form 10-K filed with the SEC on February 22, 2023. There were no material changes in our exposure to market risk from those set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

In addition to market risks described in our Annual Report on Form 10-K, we have an equity price risk related to the fair value of our convertible senior unsecured notes issued in December 2016. In December 2016, Teradyne issued $460 million aggregate principal amount of 1.25% convertible senior unsecured notes (the “Notes”) due December 15, 2023. As of October 1, 2023, $23.5 million of principal remained outstanding and the Notes had a fair value of $74.9 million. The table below provides a sensitivity analysis of hypothetical 10% changes of Teradyne’s stock price as of the end of the third quarter of 2023 and the estimated impact on the fair value of the Notes. The selected scenarios are not predictions of future events, but rather are intended to illustrate the effect such event may have on the fair value of the Notes. The fair value of the Notes is subject to equity price risk due to the convertible

feature. The fair value of the Notes will generally increase as Teradyne’s common stock price increases and will generally decrease as the common stock price declines in value. The change in stock price affects the fair value of the Notes, but does not impact Teradyne’s financial position, cash flows or results of operations due to the fixed nature of the debt obligation. Additionally, we carry the Notes at face value less unamortized discount on our balance sheet, and we present the fair value for required disclosure purposes only. In connection with the offering of the Notes we also sold warrants to the option counterparties. These transactions have been accounted for as an adjustment to our shareholders’ equity. The convertible notes hedge transactions are expected to reduce the potential equity dilution upon conversion of the Notes. The warrants along with any shares issuable upon conversion of the Notes will have a dilutive effect on our earnings per share to the extent that the average market price of our common stock for a given reporting period exceeds the applicable strike price or conversion price of the warrants or Notes, respectively.

Hypothetical Change in Teradyne Stock Price		Fair Value				Estimated change in fair value				Hypothetical percentage increase (decrease) in fair value
10% Increase		$	82,436			$	7,517				10.0	%
No Change			74,919				—				—
10% Decrease			67,402				(7,517	)			(10.0	)

As of the end of the period covered by this report, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(b) or Rule 15d-15(f) promulgated under the Exchange Act. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective in ensuring that material information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, including ensuring that such material information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended October 1, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1: Legal Proceedings

We are subject to various legal proceedings and claims which have arisen in the ordinary course of business such as, but not limited to, patent, employment, commercial and environmental matters. Teradyne believes that it has meritorious defenses against all pending claims and intends to vigorously contest them. While it is not possible to predict or determine the outcomes of any pending claims or to provide possible ranges of losses that may arise, Teradyne believes the potential losses associated with all of these actions are unlikely to have a material adverse effect on its business, financial position or results of operations.

On March 8, 2021, Industrial Automation LLC submitted a demand for arbitration against Teradyne and AutoGuide in Wilmington, Delaware alleging that Teradyne and AutoGuide breached certain provisions of the Membership Interests Purchase Agreement (the “Purchase Agreement”), dated as of October 18, 2019, among Industrial Automation LLC, Teradyne and AutoGuide. The arbitration demand sought full acceleration of the maximum earn-out amount payable under the Purchase Agreement, or $106.9 million, for the alleged breach of the earn-out provisions of the Purchase Agreement. On March 25, 2022, the arbitration claim was settled for $26.7 million. As a result, Teradyne has no remaining earn-out obligations.

In addition to other information set forth in this Form 10-Q, including the risk discussed below, you should carefully consider the factors discussed in Part I, “Item 1A: Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022, which could materially affect our business, financial condition or future results. The risk factors described in our Annual Report on Form 10-K remain applicable to our business.

The risks described in our Annual Report on Form 10-K are not the only risks that we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

Adverse developments affecting the financial services industry, including events or risks involving liquidity, defaults or non-performance by financial institutions, could have a material adverse effect on our business, financial condition or results of operations.

On March 10, 2023, Silicon Valley Bank (SVB), who is a lender in our revolving credit facility and where we maintain certain accounts and cash deposits, was placed into receivership with the Federal Deposit Insurance Corporation (FDIC), which resulted in all funds held at SVB being temporarily inaccessible by SVB’s customers. As of March 13, 2023, access to our cash and cash equivalents at SVB was fully restored. Although our cash balances at SVB are insignificant and we do not expect further developments at SVB to have a material impact on our cash and cash equivalents, we do hold cash balances in several large financial institutions significantly in excess of FDIC and global insurance limits. If other banks and financial institutions with whom we have banking relationships enter receivership or become insolvent in the future, we may be unable to access, and we may lose, some or all of our existing cash, cash equivalents and investments to the extent those funds are not insured or otherwise protected by the FDIC.

The Israel-Hamas conflict may have a material impact on our Business

The recent Israel-Hamas conflict could have a negative impact on our future revenue and supply chain, either of which could adversely affect our business and financial results. Our customers in Israel may experience delays in product releases due to impacts to their labor force and impacts on their suppliers because of the conflict, which could materially impact demand for our products. Similarly, our suppliers in Israel may experience delays in providing us with parts due to the conflict. In addition, the global economic uncertainty following the start of the conflict could impact demand for our products.

Trade regulations and restrictions impact our ability to manufacture certain products and to sell products to and support certain customers, which may materially adversely affect our sales and results of operations.

We are subject to U.S. laws and regulations that limit and restrict the export of some of our products and services and may restrict our transactions with certain customers, business partners and other persons. In certain circumstances, export control and economic sanctions regulations prohibit the export of certain products, services and technologies, and in other circumstances are required to obtain an export license before exporting the controlled item. We must also comply with export restrictions and laws imposed by other countries affecting trade and investments. We maintain an export compliance program but there are risks that the compliance controls could be circumvented, exposing us to legal liabilities. Compliance with these laws has not significantly limited our sales but could significantly limit them in the future. Changes in, and responses to, U.S. trade policy could reduce the

competitiveness of our products and cause our sales to drop, which could have a material adverse effect on our business, financial condition or results of operations.

The U.S. government from time to time has issued export restrictions that prohibit U.S. companies from exporting U.S. manufactured products, foreign manufactured products with more than 25% controlled U.S. content, as well as U.S. origin technology. For example, the U.S. Department of Commerce has restricted the access of U.S. origin technologies to certain Chinese semiconductor companies by adding those companies to the Entity List under U.S. Export Administration Regulations (“EAR”). The addition of certain of these companies to the entity list has had and will continue to have an adverse impact on our business with these customers. We will take appropriate actions, including filing for licenses with the U.S. Department of Commerce to attempt to minimize the impact of the restrictions on our business.

On May 16, 2019, Huawei and 68 of its affiliates, including HiSilicon, were added to the U.S. Department of Commerce Entity List under the EAR. This action by the U.S. Department of Commerce imposed new export licensing requirements on exports, re-exports, and in-country transfers of all U.S. regulated products, software and technology to the designated Huawei entities. On August 17, 2020, the U.S. Department of Commerce published final regulations expanding the scope of the U.S. EAR to include additional products that would become subject to export restrictions relating to Huawei entities including HiSilicon. These new regulations restrict the sale to Huawei and the designated Huawei entities of certain non-U.S. made items, such as semiconductor devices, manufactured for or sold to Huawei entities including HiSilicon under specific, detailed conditions set forth in the new regulations. These new regulations have impacted our sales to Huawei, HiSilicon and their suppliers. We are taking appropriate actions, including filing license applications and obtaining licenses from the U.S. Department of Commerce. However, we do not expect these actions will mitigate the impact of the regulations on our sales to Huawei, HiSilicon and other suppliers. As a result, the regulations will continue to have an adverse impact on our business and financial results. It is uncertain the extent these new regulations and any additional regulations that may be implemented by the U.S. Department of Commerce or other government agency may have on our business with other customers or potential customers. Also, our controls related to Entity List compliance could be circumvented, exposing us to legal liabilities.

On April 28, 2020, the U.S. Department of Commerce published new 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. The definition of military end user is broad. The regulations went into effect on June 29, 2020. In December 2020, the U.S. Department of Commerce issued a list of companies in China and other countries that it considered to be military end users. Compliance with the new export controls has impacted our ability to sell products to certain customers in China. In addition, while we maintain an export compliance program, our compliance controls could be circumvented, exposing us to legal liabilities. We will continue to assess the impact of these export controls on our business and operations and take appropriate actions, including filing for licenses with the U.S. Department of Commerce, to minimize any disruption. However, we cannot be certain that the actions we take will mitigate all the risks associated with the export controls that may impact our business.

On October 7, 2022, the U.S. Department of Commerce published 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 restrictions impacted our sales to certain companies in China and our manufacturing and development operations in China. We mitigated the impact of these restrictions on our business by obtaining licenses from the U.S. Department of Commerce. On October 17, 2023, the U.S. Department of Commerce released new rules updating the export controls issued on October 7, 2022. The new rules, which take effect on November 17, 2023, significantly limit the impact of the October 7, 2022 restrictions on our business. However, the regulations may continue to 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, our business and revenues will be adversely impacted.

In response to the regulations issued by the U.S. Department of Commerce, the Chinese government has passed new laws, including blocking legislation, which may impact our business activities in China. The Company is assessing the potential impact of these new Chinese laws and monitoring relevant laws and regulations issued by the Chinese government. The impact of these new Chinese laws on our business activities in China remains uncertain at this time.

Item 2: Unregistered Sales of Equity Securities and Use of Proceeds

In January 2023, Teradyne’s Board of Directors cancelled our 2021 repurchase program and approved a new repurchase program for up to $2.0 billion of common stock. During the nine months ended October 1, 2023, we repurchased 3.4 million shares of common stock for a total cost of $349.3 million at an average price of $103.89 per share. We record share repurchases at cost, which includes broker commissions and related excise taxes. During the nine months ended October 2, 2022, we repurchased 7.2 million shares of common stock for $750.0 million at an average price of $103.83 per share.

The following table includes information with respect to repurchases we made of our common stock during the three months ended October 1, 2023, (in thousands except per share price):

Period		Total Number of Shares (or Units) Purchased					Average Price Paid per Share (or Unit)					Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs				Maximum Number (or Approximate Dollar Value) of Shares (or Units) that may Yet Be Purchased Under the Plans or Programs (2)
July 3, 2023 - July 30, 2023			368				$	112.14					368			$	1,729,226,250
July 31, 2023 – August 27, 2023			335				$	106.17					334			$	1,693,807,449
August 28, 2023 – October 1, 2023			419				$	103.14					418			$	1,650,708,568
			1,122		(1)		$	107.00		(1)			1,119

(1)

Includes approximately three thousand shares at an average price of $109.16 withheld from employees for the payment of taxes.

(2)

As of January 1, 2023, share repurchases net of share issuances are subject to a 1% excise tax under the Inflation Reduction Act. Excise tax incurred is included as part of the cost basis of shares repurchased in the Condensed Consolidated Statements of Convertible Common Shares and Stockholders’ Equity.

We satisfy U.S. federal and state minimum withholding tax obligations due upon the vesting and the conversion of restricted stock units into shares of our common stock, by automatically withholding from the shares being issued, a number of shares with an aggregate fair market value on the date of such vesting and conversion that would satisfy the minimum withholding amount due.

Item 4: Mine Safety Disclosures

Not Applicable

10b 5-1 Trading Plans

Our officers (as defined in Rule 16a-1(f) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (“Section 16 Officers”) and directors from time to time enter into contracts, instructions or written plans for the purchase or sale of our securities that are intended to satisfy the conditions specified in Rule 10b5-1(c) under the Exchange Act for an affirmative defense against liability for trading in securities on the basis of material nonpublic information. We refer to these contracts, instructions, and written plans as “Rule 10b5-1 trading plans” and each one as a “Rule 10b5-1 trading plan.” During our fiscal quarter ended October 1, 2023, no Section 16 Officer or director adopted, modified or terminated Rule 10b5-1 trading plans.

Exhibit Number		Description
10.1		Executive Officer Change in Control Agreement dated August 21, 2023 between Teradyne, Inc. and Ujjwal Kumar (filed herewith)
10.2		Employment Agreement dated June 27, 2023 between Teradyne, Inc. and Ujjwal Kumar (filed herewith)
31.1		Certification of Principal Executive Officer, pursuant to Rule 13a-14(a) of Securities and Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
31.2		Certification of Principal Financial Officer, pursuant to Rule 13a-14(a) of Securities and Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
32.1		Certification of Principal Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)
32.2		Certification of Principal Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)
101.INS		Inline XBRL Instance Document
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (formatted as Inline XBRL, and contained in Exhibit 101)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	TERADYNE, INC.
	Registrant
	/s/ SANJAY MEHTA
	Sanjay Mehta Vice President, Chief Financial Officer and Treasurer (Duly Authorized Officer and Principal Financial Officer) November 3, 2023