Press release

inTEST Reports 4% Revenue Growth for Second Quarter 2024

0
Sponsored by Businesswire

inTEST Corporation (NYSE American: INTT), a global supplier of innovative test and process technology solutions for use in manufacturing and testing in key target markets which include automotive/EV, defense/aerospace, industrial, life sciences, security, and semiconductor (“semi”), today announced financial results for the quarter ended June 30, 2024. Results include Alfamation S.p.A. (“acquisition” or “Alfamation”) from the date of the acquisition, which was March 12, 2024. Alfamation is included in the Electronic Test division.

Nick Grant, President and CEO, commented, “While we are focused on innovating with new products, expanding our channels to market and adding new customers, we are nonetheless facing challenging market headwinds that now appear to be more persistent than we had anticipated earlier this year. We benefitted from the addition of Alfamation in the quarter which contributed $9.7 million in revenue. This was an unusually strong quarter for the acquisition given the timing of the sizeable backlog we acquired. We are very pleased with the integration progress and the synergies we are already beginning to realize. The teams are working on several opportunities with technology sharing and cross selling across our businesses. The addition of Alfamation more than offset the weakness in the semiconductor industry, and specifically the dramatic slowdown in the front-end semi market that we have experienced this year. Sales in the semi market were down 46%, or $8.7 million, year-over-year and 32%, or $4.8 million sequentially.”

He added, “We continue to see weak order levels in front-end semi as we believe the industry in the near term has sufficient capacity for silicon carbide production. Our long-term view on the growth in silicon carbide adoption remains intact. Encouragingly, back-end semi seems to be stabilizing. Nonetheless, given ongoing broader market conditions, we are taking actions to reduce costs and better align the businesses with current order levels. Thus far we have executed on $1.2 million in annualized cost reductions that we expect to begin to be realized in the second half of the year. We are also continuing to identify further opportunities to reduce costs, drive operational efficiencies and improve working capital. The weak level of orders in the quarter and less visibility into a second half recovery has resulted in resetting expectations for 2024.”

______________________________

1Orders and backlog are key performance metrics. See “Key Performance Indicators” below for important disclosures regarding inTEST’s use of these metrics.

2Adjusted earnings per diluted share is a non-GAAP financial measure. Further information can be found under “Non-GAAP Financial Measures.” See also the reconciliations of GAAP financial measures to non-GAAP financial measures that accompany this press release.

Second Quarter 2024 Review (see revenue by market and by segments in accompanying tables)

 

Three Months Ended

($ in 000s)

 

 

Change

 

Change

6/30/2024

6/30/2023

$

%

3/31/2024

$

%

Revenue

$

33,991

 

$

32,558

 

$

1,433

 

4.4

%

$

29,824

 

$

4,167

 

14.0

%

Gross profit

$

13,797

 

$

15,030

 

$

(1,233

)

-8.2

%

$

13,076

 

$

721

 

5.5

%

Gross margin

 

40.6

%

 

46.2

%

 

 

 

43.8

%

Operating expenses (incl. intangible amort.)

$

13,461

 

$

11,686

 

$

1,775

 

15.2

%

$

12,584

 

$

877

 

7.0

%

Operating income

$

336

 

$

3,344

 

$

(3,008

)

-90.0

%

$

492

 

$

(156

)

-31.7

%

Operating margin

 

1.0

%

 

10.3

%

 

 

 

1.6

%

Net earnings

$

230

 

$

2,793

 

$

(2,563

)

-91.8

%

$

662

 

$

(432

)

-65.3

%

Net margin

 

0.7

%

 

8.6

%

 

 

 

2.2

%

 

 

Earnings per diluted share (“EPS”)

$

0.02

 

$

0.24

 

$

(0.22

)

-91.7

%

$

0.05

 

$

(0.03

)

-60.0

%

Adjusted net earnings (Non-GAAP)3

$

959

 

$

3,227

 

$

(2,268

)

-70.3

%

$

1,162

 

$

(203

)

-17.5

%

Adjusted EPS (Non-GAAP)2

$

0.08

 

$

0.28

 

$

(0.20

)

-71.4

%

$

0.10

 

$

(0.02

)

-20.0

%

Adjusted EBITDA (Non-GAAP)2

$

2,154

 

$

4,795

 

$

(2,641

)

-55.1

%

$

1,811

 

$

343

 

18.9

%

Adjusted EBITDA margin (Non-GAAP)2

 

6.3

%

 

14.7

%

 

 

 

6.1

%

Compared with the prior-year period, second quarter revenue increased $1.4 million. The acquisition contributed $9.7 million in revenue. Auto/EV revenue increased $9.2 million primarily due to the acquisition. This more than offset the $8.7 million decrease in sales to the semi market. Additionally, revenue in life sciences increased $1.1 million which also benefited from the acquisition. Industrial revenue increased $0.6 million, or 22%, and helped to offset the $0.7 million combined decline in the defense/aerospace, security and other markets.

Sequentially, revenue increased by $4.2 million as revenue from Alfamation and improvements in defense/aerospace, life sciences, and security more than offset the $4.8 million decline in the semi market.

Gross margin was 40.6% in the second quarter, a 560-basis point contraction compared with the prior-year period primarily due to product mix, including the impact of the acquisition, and lower volume in the organic business affecting absorption rates. Operating expenses increased over the prior-year period primarily because of $2.4 million of incremental expenses attributable to Alfamation, including $0.4 million of amortization. Excluding the acquisition, operating expenses were down approximately $0.7 million reflecting lower bonus accruals, lower commission expense, cost reduction efforts and reduced corporate development expenses.

Higher interest expense from increased borrowings was somewhat offset by higher other income. Net earnings for the quarter were $0.2 million, or $0.02 per diluted share. Adjusted net earnings (Non-GAAP)3 were $1.0 million, or $0.08 adjusted EPS (Non-GAAP) 2.

___________________________

3Adjusted net earnings, adjusted EPS, adjusted EBITDA, and adjusted EBITDA margin are non-GAAP financial measures. Further information can be found under “Non-GAAP Financial Measures.” See also the reconciliations of GAAP financial measures to non-GAAP financial measures that accompany this press release.

Balance Sheet and Cash Flow Review

During the quarter, the Company used $5.1 million in cash from operations which included annual bonus payments and higher cash tax requirement. Cash and cash equivalents at the end of the second quarter of 2024 were $20.4 million, down $6.9 million at the end of the first quarter of 2024. Capital expenditures were $0.3 million in the second quarter of 2024, similar to the prior-year period.

At quarter end, total debt was $21.1 million, up $9.1 million from December 31, 2023. The increase from year end reflects the incremental debt inherited with the acquisition. The Company repaid approximately $1.1 million in debt in the quarter. At June 30, 2024, the Company had $30 million available under its delayed draw term loan facility and no borrowings under the $10 million revolving credit facility. On May 2, 2024, the Company extended the maturity of its delayed draw term loan and revolving credit facility to May 2, 2031. In addition, the allowed window to draw on the term loan was extended to May 2, 2026.

Second Quarter 2024 Orders and Backlog1(see orders by market in accompanying tables)

 

Three Months Ended

($ in 000s)

 

 

Change

 

Change

 

6/30/2024

6/30/2023

$

%

3/31/2024

$

%

Orders

$

26,182

$

31,431

$

(5,249

)

-16.7

%

$

22,799

$

3,383

 

14.8

%

Backlog (at quarter end)

$

47,672

$

44,578

$

3,094

 

6.9

%

$

55,481

$

(7,809

)

-14.1

%

Second quarter orders of $26.2 million, including $3.2 million in orders attributable to the acquisition, declined 17% versus the prior-year period, but improved 15%, or $3.4 million, compared with the first quarter of 2024. The year-over-year decline reflects general softness across most markets including $3.7 million, or 25%, lower orders from the semi market. Orders from the industrial market were down $2.3 million, or 40%, against a strong comparable. Excluding the acquisition in both quarters, the 10%, or $2.0 million, sequential improvement reflects increases in back-end semi, industrial, life sciences, security and other markets more than offsetting weakness in automotive/EV.

Backlog at June 30, 2024, was $47.7 million and included $16.3 million of backlog associated with the acquisition. Approximately 50% of the backlog is expected to ship beyond the third quarter of 2024.

Third Quarter and Full Year 2024 Outlook

Revenue for the third quarter of 2024 is expected to be slightly lower than the second quarter while gross margin is expected to improve somewhat based on better mix. Third quarter 2024 operating expenses, including amortization, are expected to be similar to the second quarter. Intangible asset amortization is expected to be approximately $0.9 million pre-tax, or approximately $0.7 million after tax. Interest expense is expected to be approximately $220,000 for the quarter.

Third quarter 2024 EPS and adjusted EPS (Non-GAAP)2 are expected to be similar to the second quarter based on the same number of weighted average shares.

Including first half 2024 results, the Company has updated its full year 2024 expectations as follows:

(As of August 2, 2024)

Updated Guidance

Previous Guidance

Revenue

$128 million to $133 million

$140 million to $150 million

Gross margin

42% to 43%

44% to 46%

Operating expenses

$53 million to $54 million

$56 million to $58 million

Intangible asset amort expense

Approximately $3.3 million

Approximately $5 million

Intangible asset amort exp. After tax

Approximately $2.7 million

Approximately $4.1 million

Effective tax rate

17% to 19%

17% to 19%

Capital expenditures

1% to 2% of sales

1% to 2% of sales

The foregoing guidance is based on management’s current views with respect to operating and market conditions and customers’ forecasts. It also assumes macroeconomic conditions remain unchanged through the end of the year. Actual results may differ materially from what is provided here today as a result of, among other things, the factors described under “Forward-Looking Statements” below. Further information about non-GAAP measures can be found under “Non-GAAP Financial Measures” and the reconciliations of GAAP financial measures to non-GAAP financial measures that accompany this press release.

Conference Call and Webcast

The Company will host a conference call and webcast today at 8:30 a.m. ET. During the conference call, management will review the financial and operating results and discuss inTEST’s corporate strategy and outlook. A question-and-answer session will follow. To listen to the live call, dial (201) 689-8263. In addition, the webcast and slide presentation may be found at intest.com/investor-relations.

A telephonic replay will be available from 12:30 p.m. ET on the day of the call through Friday, August 9, 2024. To listen to the archived call, dial (412) 317-6671 and enter replay pin number 13746896. The webcast replay can be accessed via the investor relations section of intest.com, where a transcript will also be posted once available.

About inTEST Corporation

inTEST Corporation is a global supplier of innovative test and process technology solutions for use in manufacturing and testing in key target markets including automotive/EV, defense/aerospace, industrial, life sciences, and security, as well as both the front-end and back-end of the semiconductor manufacturing industry. Backed by decades of engineering expertise and a culture of operational excellence, inTEST solves difficult thermal, mechanical, and electronic challenges for customers worldwide while generating strong cash flow and profits. inTEST’s strategy leverages these strengths to grow organically and with acquisitions through the addition of innovative technologies, deeper and broader geographic reach, and market expansion. For more information, visit www.intest.com.

Non-GAAP Financial Measures and Forward-Looking Non-GAAP Financial Measures

In addition to disclosing results that are determined in accordance with generally accepted accounting practices in the United States (“GAAP”), we also disclose non-GAAP financial measures. These non-GAAP financial measures consist of adjusted net earnings, adjusted earnings per diluted share (adjusted EPS), adjusted EBITDA, and adjusted EBITDA margin.

Definition of Non-GAAP Measures

The Company defines these non-GAAP measures as follows:

─ Adjusted net earnings is derived by adding acquired intangible amortization, adjusted for the related income tax expense (benefit), to net earnings.

─ Adjusted earnings per diluted share (adjusted EPS) is derived by dividing adjusted net earnings by diluted weighted average shares outstanding.

─ Adjusted EBITDA is derived by adding acquired intangible amortization, net interest expense, income tax expense, depreciation, and stock-based compensation expense to net earnings.

─ Adjusted EBITDA margin is derived by dividing adjusted EBITDA by revenue.

These results are provided as a complement to the results provided in accordance with GAAP. Adjusted net earnings and adjusted earnings per diluted share (adjusted EPS) are non-GAAP financial measures presented to provide investors with meaningful, supplemental information regarding our baseline performance before acquired intangible amortization charges as management believes this expense may not be indicative of our underlying operating performance. Adjusted EBITDA and adjusted EBITDA margin are non-GAAP financial measures presented primarily as a measure of liquidity as they exclude non-cash charges for acquired intangible amortization, depreciation and stock-based compensation. In addition, adjusted EBITDA and adjusted EBITDA margin also exclude the impact of interest income or expense and income tax expense or benefit, as management believes these expenses may not be indicative of our underlying operating performance.

Management’s Use of Non-GAAP Measures

The non-GAAP financial measures presented in this press release are used by management to make operational decisions, to forecast future operational results, and for comparison with our business plan, historical operating results and the operating results of our peers. Reconciliations from net earnings and earnings per diluted share (EPS) to adjusted net earnings and adjusted earnings per diluted share (adjusted EPS) and from net earnings and net margin to adjusted EBITDA and adjusted EBITDA margin, are contained in the tables below.

Limitations of adjusted net earnings, adjusted earnings per diluted share (adjusted EPS), adjusted EBITDA, and adjusted EBITDA margin

Each of our non-GAAP measures have limitations as analytical tools. They should not be viewed in isolation or as a substitute for GAAP measures of earnings or cash flows. Limitations may include the cash portion of interest expense, income tax (benefit) provision, charges related to intangible asset amortization and stock-based compensation expense. These items could significantly affect our financial results.

Management believes these Non-GAAP financial measures are important in evaluating our performance, results of operations, and financial position. We use non-GAAP financial measures to supplement our GAAP results to provide a more complete understanding of the factors and trends affecting our business.

Adjusted net earnings, adjusted earnings per diluted share (adjusted EPS), adjusted EBITDA, and adjusted EBITDA margin are not alternatives to net earnings, earnings per diluted share or margin as calculated and presented in accordance with GAAP. As such, they should not be considered or relied upon as substitutes or alternatives for any such GAAP financial measure. We strongly urge you to review the reconciliations of adjusted net earnings, adjusted earnings per diluted share (adjusted EPS), adjusted EBITDA, and adjusted EBITDA margin along with our financial statements included elsewhere in this press release. We also strongly urge you not to rely on any single financial measure to evaluate our business. In addition, because adjusted net earnings, adjusted earnings per diluted share (adjusted EPS), adjusted EBITDA, and adjusted EBITDA margin are not measures of financial performance under GAAP and are susceptible to varying calculations, the adjusted net earnings, adjusted earnings per diluted share (adjusted EPS), adjusted EBITDA, and adjusted EBITDA margin measures as presented in this press release may differ from and may not be comparable to similarly titled measures used by other companies.

Forward-Looking Non-GAAP Financial Measures

This release includes certain forward-looking non-GAAP financial measures, including estimated adjusted earnings per diluted share (estimated adjusted EPS). We have provided these non-GAAP measures for future guidance for the same reasons that were outlined above for historical non-GAAP measures.

We have reconciled non-GAAP forward-looking estimated adjusted EPS to its most directly comparable GAAP measure. The reconciliation from estimated net earnings per diluted share (EPS) to estimated adjusted EPS is contained in the table below.

Key Performance Indicators

In addition to the foregoing non-GAAP measures, management uses orders and backlog as key performance metrics to analyze and measure the Company’s financial performance and results of operations. Management uses orders and backlog as measures of current and future business and financial performance, and these may not be comparable with measures provided by other companies. Orders represent written communications received from customers requesting the Company to provide products and/or services. Backlog is calculated based on firm purchase orders we receive for which revenue has not yet been recognized. Management believes tracking orders and backlog are useful as it often is a leading indicator of future performance. In accordance with industry practice, contracts may include provisions for cancellation, termination, or suspension at the discretion of the customer.

Given that each of orders and backlog are operational measures and that the Company’s methodology for calculating orders and backlog does not meet the definition of a non-GAAP measure, as that term is defined by the U.S. Securities and Exchange Commission, a quantitative reconciliation for each is not required or provided.

Forward-Looking Statements

This press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. These statements do not convey historical information but relate to predicted or potential future events and financial results, such as statements of the Company’s plans, strategies and intentions, or our future performance or goals, that are based upon management’s current expectations. These forward-looking statements can often be identified by the use of forward-looking terminology such as “believe,” “continuing,” “could,” “expects,” “guidance,” “may,” “outlook,” “will,” “should,” “plan,” “potential,” “forecasts,” “targets,” “estimates,” “opportunities,” or similar terminology. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Such risks and uncertainties include, but are not limited to, any mentioned in this press release as well as the Company’s ability to execute on its 5-Point Strategy, realize the potential benefits of acquisitions and successfully integrate any acquired operations, grow the Company’s presence in its key target and international markets, manage supply chain challenges, convert backlog to sales and to ship product in a timely manner; the success of the Company’s strategy to diversify its markets; the impact of inflation on the Company’s business and financial condition; indications of a change in the market cycles in the semi market or other markets served; changes in business conditions and general economic conditions both domestically and globally including rising interest rates and fluctuation in foreign currency exchange rates; changes in the demand for semiconductors; access to capital and the ability to borrow funds or raise capital to finance potential acquisitions or for working capital; changes in the rates and timing of capital expenditures by the Company’s customers; and other risk factors set forth from time to time in the Company’s Securities and Exchange Commission filings, including, but not limited to, the Annual Report on Form 10-K for the year ended December 31, 2023. Any forward-looking statement made by the Company in this press release is based only on information currently available to management and speaks to circumstances only as of the date on which it is made. The Company undertakes no obligation to update the information in this press release to reflect events or circumstances after the date hereof or to reflect the occurrence of anticipated or unanticipated events, except as required by law.

– FINANCIAL TABLES FOLLOW –

 

inTEST CORPORATION

Consolidated Statements of Operations

(In thousands, except share and per share data)

(Unaudited)

 

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

33,991

 

 

$

32,558

 

 

$

63,815

 

 

$

64,477

 

Cost of revenue

 

 

20,194

 

 

 

17,528

 

 

 

36,942

 

 

 

34,395

 

Gross profit

 

 

13,797

 

 

 

15,030

 

 

 

26,873

 

 

 

30,082

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling expense

 

 

4,105

 

 

 

4,661

 

 

 

8,695

 

 

 

9,116

 

Engineering and product development expense

 

 

2,218

 

 

 

1,983

 

 

 

4,200

 

 

 

3,887

 

General and administrative expense

 

 

7,138

 

 

 

5,042

 

 

 

13,150

 

 

 

10,217

 

Total operating expenses

 

 

13,461

 

 

 

11,686

 

 

 

26,045

 

 

 

23,220

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

336

 

 

 

3,344

 

 

 

828

 

 

 

6,862

 

Interest expense

 

 

(253

)

 

 

(176

)

 

 

(393

)

 

 

(358

)

Other income

 

 

213

 

 

 

197

 

 

648

 

 

 

255

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings before income tax expense

 

 

296

 

 

 

3,365

 

 

 

1,083

 

 

 

6,759

 

Income tax expense

 

 

66

 

 

 

572

 

 

 

191

 

 

 

1,149

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings

 

$

230

 

 

$

2,793

 

 

$

892

 

 

$

5,610

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share – basic

 

$

0.02

 

 

$

0.25

 

 

$

0.07

 

 

$

0.51

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding – basic

 

 

12,234,599

 

 

 

11,241,183

 

 

 

12,130,480

 

 

 

10,998,456

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share – diluted

 

$

0.02

 

 

$

0.24

 

 

$

0.07

 

 

$

0.49

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares and common share equivalents outstanding – diluted

 

 

12,330,280

 

 

 

11,696,569

 

 

 

12,244,289

 

 

 

11,392,617

 

 

inTEST CORPORATION

Consolidated Balance Sheets

(In thousands)

 

 

 

June 30,

 

 

December 31,

 

 

 

2024

 

 

2023

 

 

 

(Unaudited)

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

20,370

 

 

$

45,260

 

Trade accounts receivable, net of allowance for credit losses of $416 and $474, respectively

 

 

30,066

 

 

 

18,175

 

Inventories

 

 

28,563

 

 

 

20,089

 

Prepaid expenses and other current assets

 

 

2,379

 

 

 

2,254

 

Total current assets

 

 

81,378

 

 

 

85,778

 

Property and equipment:

 

 

 

 

 

 

 

 

Machinery and equipment

 

 

8,900

 

 

 

7,118

 

Leasehold improvements

 

 

4,001

 

 

 

3,601

 

Gross property and equipment

 

 

12,901

 

 

 

10,719

 

Less: accumulated depreciation

 

 

(8,372

)

 

 

(7,529

)

Net property and equipment

 

 

4,529

 

 

 

3,190

 

Right-of-use assets, net

 

 

11,561

 

 

 

4,987

 

Goodwill

 

 

34,868

 

 

 

21,728

 

Intangible assets, net

 

 

27,058

 

 

 

16,596

 

Deferred tax assets

 

 

 

 

 

1,437

 

Restricted certificates of deposit

 

 

100

 

 

 

100

 

Other assets

 

 

1,060

 

 

 

1,013

 

Total assets

 

$

160,554

 

 

$

134,829

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Current portion of Term Note and other long-term debt

 

$

11,989

 

 

$

4,100

 

Current portion of operating lease liabilities

 

 

1,852

 

 

 

1,923

 

Accounts payable

 

 

8,281

 

 

 

5,521

 

Accrued wages and benefits

 

 

4,794

 

 

 

4,156

 

Accrued professional fees

 

 

1,100

 

 

 

1,228

 

Customer deposits and deferred revenue

 

 

5,485

 

 

 

3,797

 

Accrued sales commissions

 

 

804

 

 

 

1,055

 

Domestic and foreign income taxes payable

 

 

 

 

 

1,038

 

Other current liabilities

 

 

1,945

 

 

 

1,481

 

Total current liabilities

 

 

36,250

 

 

 

24,299

 

Operating lease liabilities, net of current portion

 

 

10,064

 

 

 

3,499

 

Term Note and other long-term debt, net of current portion

 

 

9,110

 

 

 

7,942

 

Contingent consideration

 

 

814

 

 

 

1,093

 

Deferred revenue, net of current portion

 

 

1,256

 

 

 

1,331

 

Deferred tax liabilities

 

 

1,790

 

 

 

 

Other liabilities

 

 

1,768

 

 

 

384

 

Total liabilities

 

 

61,052

 

 

 

38,548

 

Commitments and Contingencies

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.01 par value; 5,000,000 shares authorized; no shares issued or outstanding

 

 

 

 

 

 

Common stock, $0.01 par value; 20,000,000 shares authorized; 12,591,662 and 12,241,925 shares issued, respectively

 

 

126

 

 

 

122

 

Additional paid-in capital

 

 

57,660

 

 

 

54,450

 

Retained earnings

 

 

43,088

 

 

 

42,196

 

Accumulated other comprehensive earnings

 

 

(430

)

 

 

414

 

Treasury stock, at cost; 79,382 and 75,758 shares, respectively

 

 

(942

)

 

 

(901

)

Total stockholders’ equity

 

 

99,502

 

 

 

96,281

 

Total liabilities and stockholders’ equity

 

$

160,554

 

 

$

134,829

 

 

inTEST CORPORATION

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

Six Months Ended

June 30,

 

 

 

2024

 

 

2023

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

Net earnings

 

$

892

 

 

$

5,610

 

Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

2,806

 

 

 

2,350

 

Provision for excess and obsolete inventory

 

 

306

 

 

 

266

 

Foreign exchange (gain) loss

 

 

13

 

 

(47

)

Amortization of deferred compensation related to stock-based awards

 

 

913

 

 

 

1,079

 

Discount on shares sold under Employee Stock Purchase Plan

 

 

15

 

 

 

14

 

Loss on disposal of property and equipment

 

 

19

 

 

 

98

 

Deferred income tax expense (benefit)

 

 

347

 

 

 

(685

)

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Trade accounts receivable

 

 

(5,693

)

 

 

(372

)

Inventories

 

 

1,966

 

 

(693

)

Prepaid expenses and other current assets

 

 

1,296

 

 

 

212

Other assets

 

 

(118

)

 

 

2

 

Operating lease liabilities

 

 

(765

)

 

 

(849

)

Accounts payable

 

 

(1,899

)

 

 

(1,607

)

Accrued wages and benefits

 

 

(681

)

 

 

(351

)

Accrued professional fees

 

 

(124

)

 

 

117

Customer deposits and deferred revenue

 

 

(861

)

 

 

625

 

Accrued sales commissions

 

 

(244

)

 

 

(266

)

Domestic and foreign income taxes payable

 

 

(851

)

 

 

(220

)

Other current liabilities

 

 

(94

)

 

 

76

 

Deferred revenue, net of current portion

 

 

(75

)

 

 

 

Other liabilities

 

 

(183

)

 

 

(17

)

Net cash (used in) provided by operating activities

 

 

(3,015

)

 

 

5,342

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Acquisition of business, net of cash acquired

 

 

(18,727

)

 

 

 

Purchase of property and equipment

 

 

(656

)

 

 

(709

)

Net cash used in investing activities

 

 

(19,383

)

 

 

(709

)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Net proceeds from public offering of common stock

 

 

 

 

19,244

 

Proceeds from short-term borrowings

 

 

1,120

 

 

 

Repayments of long-term borrowings

 

 

(3,129

)

 

 

(2,050

)

Proceeds from stock options exercised

 

 

116

 

 

 

900

 

Proceeds from shares sold under Employee Stock Purchase Plan

 

 

84

 

 

 

83

 

Settlement of employee tax liabilities in connection with treasury stock transaction

 

 

(41

)

 

 

(74

)

Net cash (used in) provided by financing activities

 

 

(1,850

)

 

 

18,103

 

 

 

 

 

 

 

 

 

Effects of exchange rates on cash

 

 

(642

)

 

 

123

 

 

 

 

 

 

 

 

 

 

Net cash (used in) provided by all activities

 

 

(24,890

)

 

 

22,859

 

Cash, cash equivalents and restricted cash at beginning of period

 

 

45,260

 

 

 

14,576

 

Cash and cash equivalents at end of period

 

$

20,370

 

 

$

37,435

 

 

inTEST CORPORATION

Revenue by Market

(In thousands)

(Unaudited)

 

($ in 000s)

Three Months Ended

 

 

 

 

 

Change

 

 

Change

 

6/30/2024

6/30/2023

$

%

3/31/2024

$

%

Revenue

 

 

 

 

Semi

$

10,124

29.8

%

$

18,833

57.8

%

$

(8,709

)

-46.2

%

$

14,967

50.2

%

$

(4,843

)

-32.4

%

Industrial

 

3,415

10.0

%

 

2,806

8.6

%

 

609

 

21.7

%

 

4,187

14.0

%

 

(772

)

-18.4

%

Auto/EV

 

10,735

31.6

%

 

1,542

4.7

%

 

9,193

 

596.2

%

 

3,958

13.3

%

 

6,777

 

171.2

%

Life Sciences

 

2,194

6.5

%

 

1,135

3.5

%

 

1,059

 

93.3

%

 

653

2.2

%

 

1,541

 

236.0

%

Defense/Aerospace

 

3,682

10.8

%

 

3,890

11.9

%

 

(208

)

-5.3

%

 

3,239

10.9

%

 

443

 

13.7

%

Security

 

792

2.3

%

 

936

2.9

%

 

(144

)

-15.4

%

 

541

1.8

%

 

251

 

46.4

%

Other

 

3,049

9.0

%

 

3,416

10.6

%

 

(367

)

-10.7

%

 

2,279

7.6

%

 

770

 

33.8

%

$

33,991

100.0

%

$

32,558

100.0

%

$

1,433

 

4.4

%

$

29,824

100.0

%

$

4,167

 

14.0

%

 

Orders by Market

(In thousands)

(Unaudited)

 

($ in 000s)

Three Months Ended

 

 

 

 

 

Change

 

 

Change

 

6/30/2024

6/30/2023

$

%

3/31/2024

$

%

Orders

 

 

 

 

Semi

$

11,026

42.1

%

$

14,721

46.9

%

$

(3,695

)

-25.1

%

$

10,253

45.0

%

$

773

 

7.5

%

Industrial

 

3,485

13.4

%

 

5,756

18.3

%

 

(2,271

)

-39.5

%

 

3,093

13.5

%

 

392

 

12.7

%

Auto/EV

 

4,721

18.0

%

 

3,276

10.4

%

 

1,445

 

44.1

%

 

4,041

17.7

%

 

680

 

16.8

%

Life Sciences

 

1,025

3.9

%

 

609

1.9

%

 

416

 

68.3

%

 

698

3.1

%

 

327

 

46.8

%

Defense/Aerospace

 

2,665

10.2

%

 

3,216

10.2

%

 

(551

)

-17.1

%

 

2,684

11.8

%

 

(19

)

-0.7

%

Security

 

81

0.3

%

 

456

1.5

%

 

(375

)

-82.2

%

 

40

0.2

%

 

41

 

102.5

%

Other

 

3,179

12.1

%

 

3,397

10.8

%

 

(218

)

-6.4

%

 

1,990

8.7

%

 

1,189

 

59.7

%

$

26.182

100.0

%

$

31,431

100.0

%

$

(5,249

)

-16.7

%

$

22,799

100.0

%

$

3,383

 

14.8

%

 

inTEST CORPORATION

Segment Data

(In thousands)

(Unaudited)

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

Electronic Test

$

16,159

 

 

$

10,993

 

 

$

27,275

 

 

$

21,364

 

Environmental Technologies

 

8,273

 

 

 

8,136

 

 

 

15,101

 

 

 

16,178

 

Process Technologies

 

9,559

 

 

 

13,429

 

 

 

21,439

 

 

 

26,935

 

Total Revenue

$

33,991

 

 

$

32,558

 

 

$

63,815

 

 

$

64,477

 

 

 

 

 

 

 

 

 

 

 

 

 

Division operating income:

 

 

 

 

 

 

 

 

 

 

 

Electronic Test

$

1,743

 

 

$

2,641

 

 

$

3,556

 

 

$

5,219

 

Environmental Technologies

 

993

 

 

 

943

 

 

 

1,008

 

 

 

1,956

 

Process Technologies

 

970

 

 

 

2,592

 

 

 

2,931

 

 

 

5,268

 

Total division operating income

 

3,706

 

 

 

6,176

 

 

 

7,495

 

 

 

12,443

 

Corporate expenses

 

(2,473

)

 

 

(2,309

)

 

 

(5,175

)

 

 

(4,514

)

Acquired intangible amortization

 

(897

)

 

 

(523

)

 

 

(1,492

)

 

 

(1,067

)

Interest expense

 

(253

)

 

 

(176

)

 

 

(393

)

 

 

(358

)

Other income

 

213

 

 

 

197

 

 

 

648

 

 

 

255

 

Earnings before income tax expense

$

296

 

 

$

3,365

 

 

$

1,083

 

 

$

6,759

 

 

inTEST CORPORATION

Reconciliation of Non-GAAP Financial Measures

(In thousands, except per share and percentage data)

(Unaudited)

 
Reconciliation of Net Earnings to Adjusted Net Earnings (Non-GAAP) and
Earnings Per Diluted Share to Adjusted EPS (Non-GAAP):
 

 

Three Months Ended

6/30/2024

 

6/30/2023

 

3/31/2024

 

 

Net earnings

$

230

 

$

2,793

 

$

662

 

Acquired intangible amortization

 

897

 

 

523

 

 

595

 

Tax adjustments

 

(168

)

 

(89

)

 

(95

)

Adjusted net earnings (Non-GAAP)

$

959

 

$

3,227

 

$

1,162

 

 

Diluted weighted average shares outstanding

 

12,330

 

 

11,697

 

 

12,158

 

Earnings per diluted share:(1)

Net earnings

$

0.02

 

$

0.24

 

$

0.05

 

Acquired intangible amortization

 

0.07

 

 

0.05

 

 

0.05

 

Tax adjustments

 

(0.01

)

 

(0.01

)

 

(0.01

)

Adjusted EPS (Non-GAAP)

$

0.08

 

$

0.28

 

$

0.10

 

(1)

Components may not add up to totals due to rounding.

 
Reconciliation of Net Earnings and Net Margin to Adjusted EBITDA (Non-GAAP) and
Adjusted EBITDA Margin (Non-GAAP):
 

 

Three Months Ended

6/30/2024

 

6/30/2023

 

3/31/2024

 

 

Net earnings

$

230

 

$

2,793

 

$

662

 

Acquired intangible amortization

 

897

 

 

523

 

 

595

 

Net interest (income) expense

 

41

 

 

43

 

 

(193

)

Income tax expense

 

66

 

 

572

 

 

125

 

Depreciation

 

356

 

 

259

 

 

273

 

Non-cash stock-based compensation

 

564

 

 

605

 

 

349

 

Adjusted EBITDA (Non-GAAP)

$

2,154

 

$

4,795

 

$

1,811

 

Revenue

 

33,991

 

 

32,558

 

 

29,824

 

Net margin

 

0.7

%

 

 

8.6

%

 

 

2.2

%

Adjusted EBITDA margin (Non-GAAP)

 

6.3

%

 

14.7

%

 

6.1

%

 
Reconciliation of Third Quarter 2024 Estimated Earnings Per Diluted Share to
Estimated Adjusted EPS (Non-GAAP):
 

 

Estimated

 

 

Estimated earnings per diluted share

~$0.02

Estimated acquired intangible amortization

~0.07

Estimated tax adjustments

~(0.01)

Estimated adjusted EPS (Non-GAAP)

~$0.08