inTEST Reports Record $32.7 Million in Revenue for the 2023 Third Quarter with Earnings per Diluted Share up 4% to $0.24 Year-over-Year

  • Continued execution of Five-Point Strategy delivers third quarter revenue of

    $32.7 million, up 6% year-over-year while relatively unchanged from trailing second quarter
  • Gross profit margin in third quarter was 46.9%, a 170 basis point expansion over prior-year period and 70 basis point improvement over trailing second quarter
  • Quarterly net income of $3.0 million grew 18% year-over-year
  • Strong cash generation from operations in the quarter of $6.2 million drove overall cash to $41.7 million enhancing financial flexibility
  • Moderating full year expectations on fluctuations in demand

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 September 30, 2023.

Nick Grant, President and CEO, commented, “We believe the effectiveness of our Five-Point Strategy to drive growth and profitability through geographic and market diversification, deeper market penetration and broader reach was demonstrated by our strong financial results in the quarter. Compared with the prior year, sales to the defense/aerospace, semi, industrial and security markets contributed to our growth. We continue to invest in geographic expansion, product development and sales channels to drive growth in our key target markets. For example, we have launched several new products across our businesses and are successfully working with customers to benefit from our broader product portfolio.”

He continued, “Nonetheless, late in the quarter we experienced shifts in customer demand causing some headwinds and slowing in markets that just recently had solid momentum. We believe this was a result of worsening macroeconomic conditions, sustained higher interest rates and greater uncertainty regarding capital investments. As a result, we saw a shift in demand as our customers slowed purchase decisions and delayed projects. Compared with the trailing second quarter, the slowdown was especially apparent in the semi and industrial markets. However, helping to partially offset these headwinds are promising developments in new markets and products. While we believe that the diversity in our offerings, end markets and geographic reach continue to support our long-term growth goals, we are moderating our expectations for the balance of 2023.”

Third Quarter 2023 Review (see revenue by market and by segments in accompanying tables)

Three Months Ended

($ in 000s, except per share)

Change

Change

9/30/2023

9/30/2022

$

%

6/30/2023

$

%

Revenue

$32,663

$30,771

$1,892

6.1%

$32,558

$105

0.3%

Gross profit

$15,334

$13,898

$1,436

10.3%

$15,030

$304

2.0%

Gross margin

46.9%

45.2%

 

46.2%

Operating expenses (incl. intangible amort.)

$12,051

$10,739

$1,312

12.2%

$11,686

$365

3.1%

Operating income

$3,283

$3,159

$124

3.9%

$3,344

($61)

-1.8%

Operating margin

10.1%

10.3%

 

10.3%

Net earnings

$2,966

$2,524

$442

17.5%

$2,793

$173

6.2%

Net margin

9.1%

8.2%

 

 

8.6%

 

 

Earnings per diluted share (“EPS”)

$0.24

$0.23

$0.01

4.3%

$0.24

$0.00

0.0%

Adjusted net earnings (Non-GAAP) (1)

$3,398

$3,016

$382

12.7%

$3,227

$171

5.3%

Adjusted EPS (Non-GAAP) (1)

$0.28

$0.28

$0.00

0.0%

$0.28

$0.00

0.0%

Adjusted EBITDA (Non-GAAP) (1)

$4,583

$4,453

$130

2.9%

$4,795

($212)

-4.4%

Adjusted EBITDA margin (Non-GAAP) (1)

14.0%

14.5%

14.7%

(1) Adjusted 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.

Compared with the prior-year period, revenue increased $1.9 million, or 6%. Defense/aerospace revenue increased 77% to $3.4 million while semi revenue was up 3% to $19.8 million. The increase in semi was driven by front-end applications of induction heating solutions for silicon carbide crystal growth and wafer epitaxy. Revenue related to the security, industrial and auto/EV industries increased 27%, 15% and 10%, respectively.

Compared with the trailing second quarter of 2023, life sciences revenue increased 36%, security industry revenue was up 18%, and automotive/EV revenue was up 16%. Semi market revenue grew 5% driven by increases in both front-end and back-end related sales. Sales to defense/aerospace and industrial markets saw sequential declines primarily reflecting the variability in timing of customer needs from quarter to quarter.

Gross margin expanded 170 basis points compared with the prior-year period. Strong gross margin in the quarter reflected higher volume, favorable product mix, improved pricing and continued focus on productivity improvements. Sequentially, the 70-basis point expansion was primarily the result of a more favorable product mix.

Operating income grew 4% year-over-year to $3.3 million. While division operating income increased $0.8 million, or 14%, the improvement was offset by an increase in corporate development expenses. Operating margins remained steady at approximately 10% year-over-year and sequentially.

In addition to the impacts noted above, net income benefitted from higher interest income on a larger cash balance and increased 18% year-over-year.

Balance Sheet and Cash Flow Review

Cash and cash equivalents at the end of the third quarter of 2023 were $41.7 million, an increase of $4.3 million from June 30, 2023. During the quarter, the Company generated $6.2 million in cash from operations. Capital expenditures in the third quarter were $0.3 million, similar to the 2022 third quarter. After paying down $1.0 million in debt, total debt was $13.1 million at quarter end.

Third Quarter 2023 Orders and Backlog (see orders by market in accompanying tables)

 

Three Months Ended

($ in 000s)

 

 

Change

 

Change

 

9/30/2023

9/30/2022

$

%

6/30/2023

$

%

Orders

$26,854

$32,680

$(5,826)

-17.8%

$31,431

$(4,577)

-14.6%

Backlog (at quarter end)

$38,769

$47,890

$(9,121)

-19.0%

$44,578

$(5,809)

-13.0%

Orders received in the third quarter were 18% lower than the prior-year period. Increased demand from the security and automotive/EV markets partially offset lower demand from the semi, industrial, defense/aerospace and other markets. Orders more than doubled for the security market and grew 6% in automotive/EV. Sequentially, orders were down 15% as growth in security and life sciences were more than offset by reductions in the remainder of markets served.

Backlog at September 30, 2023, was $38.8 million, down 19% and 13% from September 30, 2022 and June 30, 2023, respectively. Approximately 40% of backlog is expected to ship beyond the fourth quarter of 2023.

Order and backlogs are key performance metrics the management uses to analyze and measure the Company’s financial performance and results of operations. Please see “Key Performance Indicators” for a further explanation of the use and how these metrics are calculated.

Fourth Quarter and Full Year 2023 Outlook

The Company is moderating its expectations for the remainder of 2023 to reflect the recent shift in customer demand.

Duncan Gilmour, Chief Financial Officer, commented, “Given the change in customer behavior regarding project timing, order push outs and decisions on future projects, we believe it is prudent to moderate our expectations for the fourth quarter. We currently expect that next year will have a slower start than we originally anticipated and will gradually improve as we execute on our growth plans.”

Revenue for the fourth quarter of 2023 is expected to be approximately $28 million to $30 million with gross margin of approximately 45%. Fourth quarter 2023 operating expenses, including amortization, are expected to be approximately $11.7 million. Intangible asset amortization is expected to be approximately $515,000 pre-tax, which is approximately $430,000 after tax, or $0.04 per share. Net interest income for the fourth quarter is expected to be similar to the third quarter. The effective tax rate is expected to be approximately 16% for the fourth quarter. Weighted average shares are expected to be about 12.2 million in the fourth quarter.

Fourth quarter 2023 estimated EPS is expected to be in the range of $0.08 to $0.13, while fourth quarter estimated adjusted EPS (Non-GAAP)(2) is expected to be in the range of $0.12 to $0.17.

For the full year of 2023, the Company is updating its guidance as follows:

(as of November 3, 2023)

Current 2023 Guidance

Previous Guidance

Revenue

$125 million to $127 million

$127 million to $131 million

Gross margin

Unchanged

Approximately 46%

Operating expenses

~$47 million

$46 million to $47 million

Intangible asset amort expense

Unchanged

Approximately $2.1 million

Intangible asset amort exp. after tax

Unchanged

Approximately $1.7 million

Effective tax rate

Unchanged

16% to 17%

Capital expenditures

Unchanged

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 and does not take into account any extraordinary non-operating expenses that may occur from time to time. 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.

_________________________________________

(2) Fourth quarter 2023 estimated adjusted EPS is a forward-looking non-GAAP financial measure. Further information can be found under “Forward-looking Non-GAAP Financial Measures.” See also 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 https://www.intest.com/investor-relations.

A telephonic replay will be available from 11:30 a.m. ET on the day of the call through Friday, November 10, 2023. To listen to the archived call, dial (412) 317-6671 and enter replay pin number 13741799. The webcast replay can be accessed via the investor relations section at www.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 in order 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 on the basis of firm purchase orders we receive for which revenue has not yet been recognized. Management believes tracking orders and backlog are useful as it often times 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,” “could,” “expects,” “may,” “will,” “should,” “plan,” “potential,” “forecasts,” “outlook,” “anticipates,” “targets,” “estimates,” 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, achieve high single-digit growth in 2023, 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, 2022. 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.

 

inTEST CORPORATION

Consolidated Statements of Operations

(In thousands, except share and per share data)

(Unaudited)

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

32,663

 

 

$

30,771

 

 

$

97,140

 

 

$

84,423

 

Cost of revenue

 

 

17,329

 

 

 

16,873

 

 

 

51,724

 

 

 

45,964

 

Gross profit

 

 

15,334

 

 

 

13,898

 

 

 

45,416

 

 

 

38,459

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling expense

 

 

4,367

 

 

 

4,009

 

 

 

13,483

 

 

 

11,498

 

Engineering and product development expense

 

 

1,802

 

 

 

1,866

 

 

 

5,689

 

 

 

5,649

 

General and administrative expense

 

 

5,882

 

 

 

4,864

 

 

 

16,099

 

 

 

14,623

 

Total operating expenses

 

 

12,051

 

 

 

10,739

 

 

 

35,271

 

 

 

31,770

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

3,283

 

 

 

3,159

 

 

 

10,145

 

 

 

6,689

 

Interest expense

 

 

(168

)

 

 

(179

)

 

 

(526

)

 

 

(457

)

Other income

 

 

423

 

 

 

59

 

 

678

 

 

 

32

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings before income tax expense

 

 

3,538

 

 

 

3,039

 

 

 

10,297

 

 

 

6,264

 

Income tax expense

 

 

572

 

 

 

515

 

 

 

1,721

 

 

 

1,047

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings

 

$

2,966

 

 

$

2,524

 

 

$

8,576

 

 

$

5,217

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share - basic

 

$

0.25

 

 

$

0.24

 

 

$

0.76

 

 

$

0.49

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding - basic

 

 

11,886,005

 

 

 

10,695,867

 

 

 

11,294,306

 

 

 

10,655,469

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share - diluted

 

$

0.24

 

 

$

0.23

 

 

$

0.74

 

 

$

0.48

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares and common share equivalents outstanding - diluted

 

 

12,212,317

 

 

 

10,864,540

 

 

 

11,665,850

 

 

 

10,840,644

 

 

inTEST CORPORATION

Consolidated Balance Sheets

(In thousands)

 

 

 

September 30,

 

 

December 31,

 

 

 

2023

 

 

2022

 

 

 

(Unaudited)

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

41,685

 

 

$

13,434

 

Restricted cash

 

 

-

 

 

 

1,142

 

Trade accounts receivable, net of allowance for credit losses of $499 and $496, respectively

 

 

20,710

 

 

 

21,215

 

Inventories

 

 

22,156

 

 

 

22,565

 

Prepaid expenses and other current assets

 

 

1,672

 

 

 

1,695

 

Total current assets

 

 

86,223

 

 

 

60,051

 

Property and equipment:

 

 

 

 

 

 

 

 

Machinery and equipment

 

 

6,829

 

 

 

6,625

 

Leasehold improvements

 

 

3,581

 

 

 

3,242

 

Gross property and equipment

 

 

10,410

 

 

 

9,867

 

Less: accumulated depreciation

 

 

(7,267

)

 

 

(6,735

)

Net property and equipment

 

 

3,143

 

 

 

3,132

 

Right-of-use assets, net

 

 

4,755

 

 

 

5,770

 

Goodwill

 

 

21,578

 

 

 

21,605

 

Intangible assets, net

 

 

16,959

 

 

 

18,559

 

Deferred tax assets

 

 

1,381

 

 

 

280

 

Restricted certificates of deposit

 

 

100

 

 

 

100

 

Other assets

 

 

444

 

 

 

569

 

Total assets

 

$

134,583

 

 

$

110,066

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Current portion of Term Note

 

$

4,100

 

 

$

4,100

 

Current portion of operating lease liabilities

 

 

1,730

 

 

 

1,645

 

Accounts payable

 

 

7,296

 

 

 

7,394

 

Accrued wages and benefits

 

 

4,030

 

 

 

3,907

 

Accrued professional fees

 

 

1,188

 

 

 

884

 

Customer deposits and deferred revenue

 

 

3,709

 

 

 

4,498

 

Accrued sales commissions

 

 

1,248

 

 

 

1,468

 

Domestic and foreign income taxes payable

 

 

1,245

 

 

 

1,409

 

Other current liabilities

 

 

1,557

 

 

 

1,564

 

Total current liabilities

 

 

26,103

 

 

 

26,869

 

Operating lease liabilities, net of current portion

 

 

3,501

 

 

 

4,705

 

Term Note, net of current portion

 

 

8,967

 

 

 

12,042

 

Contingent consideration

 

 

1,002

 

 

 

1,039

 

Other liabilities

 

 

397

 

 

 

455

 

Total liabilities

 

 

39,970

 

 

 

45,110

 

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; 12,237,070 and 11,063,271 shares issued, respectively

 

 

122

 

 

 

111

 

Additional paid-in capital

 

 

53,960

 

 

 

31,987

 

Retained earnings

 

 

41,430

 

 

 

32,854

 

Accumulated other comprehensive earnings

 

 

2

 

 

 

218

 

Treasury stock, at cost; 75,758 and 34,308 shares, respectively

 

 

(901

)

 

 

(214

)

Total stockholders' equity

 

 

94,613

 

 

 

64,956

 

Total liabilities and stockholders' equity

 

$

134,583

 

 

$

110,066

 

 

inTEST CORPORATION

Consolidated Statements of Cash Flows

(In thousands)

 

(Unaudited)

 

Nine Months Ended

September 30,

 

 

 

2023

 

 

2022

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

Net earnings

 

$

8,576

 

 

$

5,217

 

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

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

3,515

 

 

 

3,674

 

Provision for excess and obsolete inventory

 

 

385

 

 

 

307

 

Foreign exchange loss

 

 

17

 

 

 

107

 

Amortization of deferred compensation related to stock-based awards

 

 

1,623

 

 

 

1,373

 

Discount on shares sold under Employee Stock Purchase Plan

 

 

21

 

 

 

28

 

Loss on disposal of property and equipment

 

 

164

 

 

 

45

 

Deferred income tax benefit

 

 

(1,101

)

 

 

(1,162

)

Adjustment to contingent consideration liability

 

 

(358

)

 

 

-

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Trade accounts receivable

 

 

480

 

 

 

(4,900

)

Inventories

 

 

(9

)

 

 

(8,549

)

Prepaid expenses and other current assets

 

 

21

 

 

 

(907

)

Other assets

 

 

9

 

 

 

(1

)

Operating lease liabilities

 

 

(1,275

)

 

 

(1,064

)

Accounts payable

 

 

(100

)

 

 

3,947

 

Accrued wages and benefits

 

 

125

 

 

(527

)

Accrued professional fees

 

 

305

 

 

 

(153

)

Customer deposits and deferred revenue

 

 

(794

)

 

 

(827

)

Accrued sales commissions

 

 

(220

)

 

 

310

 

Domestic and foreign income taxes payable

 

 

(166

)

 

 

(672

)

Other current liabilities

 

 

320

 

 

 

35

 

Other liabilities

 

 

(17

)

 

 

61

 

Net cash provided by (used in) operating activities

 

 

11,521

 

 

 

(3,658

)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Refund of final working capital adjustment related to Acculogic

 

 

-

 

 

 

371

 

Purchase of property and equipment

 

 

(983

)

 

 

(1,043

)

Purchase of short-term investments

 

 

-

 

 

 

(3,494

)

Net cash used in investing activities

 

 

(983

)

 

 

(4,166

)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Net proceeds from public offering of common stock

 

 

19,244

 

 

 

-

 

Repayments of Term Note

 

 

(3,075

)

 

 

(2,933

)

Proceeds from shares sold under Employee Stock Purchase Plan

 

 

118

 

 

 

148

 

Proceeds from stock options exercised

 

 

978

 

 

 

38

 

Acquisition of treasury stock-shares surrendered by employees to satisfy tax liability

 

 

(687

)

 

 

(10

)

Net cash provided by (used in) financing activities

 

 

16,578

 

 

 

(2,757

)

 

 

 

 

 

 

 

 

 

Effects of exchange rates on cash

 

 

(7

)

 

 

(576

)

 

 

 

 

 

 

 

 

 

Net cash provided by (used in) all activities

 

 

27,109

 

 

 

(11,157

)

Cash and cash equivalents at beginning of period

 

 

14,576

 

 

 

21,195

 

Cash and cash equivalents at end of period

 

$

41,685

 

 

$

10,038

 

 

inTEST CORPORATION

 

 

Revenue by Market

(In thousands)

(Unaudited)

 

($ in 000s)

Three Months Ended

Change

Change

9/30/2023

9/30/2022

$

%

6/30/2023

$

%

Revenue

Semi

$19,767

60.5%

$19,170

62.3%

$597

3.1%

$18,833

57.8%

$934

5.0%

Industrial

2,456

7.5%

2,130

6.9%

326

15.3%

2,806

8.6%

(350)

-12.5%

Auto/EV

1,789

5.5%

1,621

5.3%

168

10.4%

1,542

4.7%

247

16.0%

Life Sciences

1,540

4.7%

1,715

5.6%

(175)

-10.2%

1,135

3.5%

405

35.7%

Defense/Aerospace

3,392

10.4%

1,914

6.2%

1,478

77.2%

3,890

11.9%

(498)

-12.8%

Security

1,102

3.4%

871

2.8%

231

26.5%

936

2.9%

166

17.7%

Other

2,617

8.0%

3,350

10.9%

(733)

-21.9%

3,416

10.6%

(799)

-23.4%

$32,663

100.0%

$30,771

100.0%

$1,892

6.1%

$32,558

100.0%

$105

0.3%

 

Orders by Market

(In thousands)

(Unaudited)

 

($ in 000s)

Three Months Ended

Change

Change

9/30/2023

9/30/2022

$

%

6/30/2023

$

%

Orders

Semi

$12,935

48.2%

$19,181

58.7%

(6,246)

-32.6%

$14,721

46.9%

$(1,786)

-12.1%

Industrial

1,637

6.1%

2,309

7.1%

(672)

-29.1%

5,756

18.3%

(4,119)

-71.6%

Auto/EV

3,051

11.3%

2,870

8.8%

181

6.3%

3,276

10.4%

(225)

-6.9%

Life Sciences

931

3.5%

927

2.8%

4

0.4%

609

1.9%

322

52.9%

Defense/Aerospace

3,032

11.3%

3,149

9.6%

(117)

-3.7%

3,216

10.2%

(184)

-5.7%

Security

2,212

8.2%

1,072

3.3%

1,140

106.3%

456

1.5%

1,756

385.1%

Other

3,056

11.4%

3,172

9.7%

(116)

-3.7%

3,397

10.8%

(341)

-10.0%

$26,854

100.0%

$32,680

100.0%

(5,826)

-17.8%

$31,431

100.0%

$(4,577)

-14.6%

 

inTEST CORPORATION

 

Segment Data

(In thousands)

(Unaudited)

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30

 

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

Electronic Test

$

11,547

 

 

$

10,408

 

 

$

32,911

 

 

$

28,983

 

Environmental Technologies

 

7,000

 

 

 

7,631

 

 

 

23,178

 

 

 

22,131

 

Process Technologies

 

14,116

 

 

 

12,732

 

 

 

41,051

 

 

 

33,309

 

Total Revenue

$

32,663

 

 

$

30,771

 

 

$

97,140

 

 

$

84,423

 

 

 

 

 

 

 

 

 

 

 

 

 

Division operating income:

 

 

 

 

 

 

 

 

 

 

 

Electronic Test

$

3,268

 

 

$

2,406

 

 

$

8,487

 

 

$

6,486

 

Environmental Technologies

 

523

 

 

 

1,021

 

 

 

2,479

 

 

 

2,893

 

Process Technologies

 

2,909

 

 

 

2,465

 

 

 

8,177

 

 

 

5,764

 

Total division operating income

 

6,700

 

 

 

5,892

 

 

 

19,143

 

 

 

15,143

 

Corporate expenses

 

(2,902

)

 

 

(2,138

)

 

 

(7,416

)

 

 

(6,312

)

Acquired intangible amortization

 

(515

)

 

 

(595

)

 

 

(1,582

)

 

 

(2,142

)

Interest expense

 

(168

)

 

 

(179

)

 

 

(526

)

 

 

(457

)

Other income

 

423

 

 

 

59

 

 

 

678

 

 

 

32

 

Earnings before income tax expense

$

3,538

 

 

$

3,039

 

 

$

10,297

 

 

$

6,264

 

 

 

 

 

 

 

 

 

 

 

 

 

inTEST CORPORATION

Reconciliation of GAAP Measures to 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

9/30/2023

 

9/30/2022

 

6/30/2023

 

 

Net earnings

$

2,966

 

$

2,524

 

$

2,793

 

Acquired intangible amortization

 

515

 

 

595

 

 

523

 

Tax adjustments

 

(83

)

 

(103

)

 

(89

)

Adjusted net earnings (Non-GAAP)

$

3,398

 

$

3,016

 

$

3,227

 

 

Diluted weighted average shares outstanding

 

12,212

 

 

10,865

 

 

11,697

 

Earnings per diluted share:

Net earnings

$

0.24

 

$

0.23

 

$

0.24

 

Acquired intangible amortization

 

0.05

 

 

0.06

 

 

0.05

 

Tax adjustments

 

(0.01

)

 

(0.01

)

 

(0.01

)

Adjusted EPS (Non-GAAP)

$

0.28

 

$

0.28

 

$

0.28

 

 

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

Adjusted EBITDA Margin (Non-GAAP):

 

Three Months Ended

9/30/2023

 

9/30/2022

 

6/30/2023

 

 

Net earnings

$

2,966

 

$

2,524

 

$

2,793

 

Acquired intangible amortization

 

515

 

 

595

 

 

523

 

Net interest expense (income)

 

(276

)

 

166

 

 

43

 

Income tax expense

 

572

 

 

515

 

 

572

 

Depreciation

 

262

 

 

203

 

 

259

 

Non-cash stock-based compensation

 

544

 

 

450

 

 

605

 

Adjusted EBITDA (Non-GAAP)

$

4,583

 

$

4,453

 

$

4,795

 

Revenue

 

32,663

 

 

30,771

 

 

32,558

 

Net margin

 

9.1

%

 

 

8.2

%

 

 

8.6

%

Adjusted EBITDA margin (Non-GAAP)

 

14.0

%

 

14.5

%

 

14.7

%

 

Reconciliation of Fourth Quarter 2023 Estimated Earnings Per Diluted Share to

Estimated Adjusted EPS (Non-GAAP):

 

 

Low

 

High

 

 

 

 

Estimated earnings per diluted share

$

0.08

 

 

$

0.13

 

Estimated acquired intangible amortization

 

0.05

 

 

 

0.05

 

Estimated tax adjustments

 

(0.01

)

 

 

(0.01

)

Estimated adjusted EPS (Non-GAAP)

$

0.12

 

 

$

0.17

 

 

Contacts

inTEST Corporation

Duncan Gilmour

Chief Financial Officer and Treasurer

Tel: (856) 505-8999

Investors:

Deborah K. Pawlowski, Kei Advisors LLC

dpawlowski@keiadvisors.com

Tel: (716) 843-3908

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