SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
(Exact Name of Registrant as Specified in its Charter)
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(State or Other Jurisdiction of Incorporation)
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(Commission File Number)
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(I.R.S. Employer Identification No.)
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(Address of Principal Executive Offices, including zip code) |
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(Registrant's Telephone Number, including area code) |
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N/A
(Former name or former address, if changed since last report) |
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written Communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Securities registered pursuant to Section 12(b) of the Act:
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Title of Each Class
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Trading Symbol
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Name of Each Exchange on Which Registered
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter)
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Emerging growth company
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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. ☐
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Item 9.01. Financial Statements and Exhibits
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Exhibit No.
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Description
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99.1
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104
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Cover Page Interactive Data File – the cover page XBRL tags are embedded within the Inline XBRL document.
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inTEST CORPORATION
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By:
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/s/ Duncan Gilmour
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Duncan Gilmour
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Chief Financial Officer, Treasurer and Secretary
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Exhibit 99.1
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NEWS RELEASE |
804 East Gate Drive, Suite 200, Mount Laurel, NJ 08054
FOR IMMEDIATE RELEASE
inTEST Achieves 46.3% Gross Margin for Third Quarter 2024
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● |
Gross margin expanded 570 basis points compared with the second quarter 2024 on $3.7 million less revenue; third quarter revenue was $30.3 million |
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Operating income increased sequentially by $0.2 million and operating margin expanded 60 basis points on improved mix, cost actions and operational execution |
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Orders1 grew 5% year-over-year and 7% sequentially to $28.1 million; Alfamation orders improved 21% sequentially |
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Earnings per diluted share was $0.04 while adjusted earnings per diluted share2 was $0.10 |
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● |
Generated $4.2 million in cash from operations in the quarter; paid down $5.3 million in debt and repurchased $1 million in shares |
MT. LAUREL, NJ – November 1, 2024 -- 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, 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, “We delivered a solid quarter with revenue somewhat below our expectations although we delivered better than forecasted margins. While we had approximately $2 million in shipments that were delayed into the fourth quarter, we had better mix compared with the trailing second quarter primarily due to semi shipments being more heavily weighted toward backend test. In addition, we have taken out costs to better align with current market conditions. Importantly, we generated cash from operations and, given our financial flexibility, we both paid down debt and repurchased shares. We believe that investing in our business is a great use of capital.”
He added, “The team continues to execute on our strategy. We are adding new customers, continue to optimize our channels to market and are driving innovation. While our visibility is limited given market conditions, we are encouraged with what appears to be some stabilization in our targeted industries as orders gradually improved through the quarter. We expect demand for our induction heating technology for front-end semi will lag recovery in our other markets but remain excited about the underlying fundamentals that will drive long term growth for these solutions. We believe the appeal of our engineered solutions, the diversification in our target markets and our success with scaling the business through acquisitions has provided relative stability in revenue and the ability to generate profits through industry cycles.”
1 Orders and backlog are key performance metrics. See “Key Performance Indicators” below for important disclosures regarding inTEST’s use of these metrics.
2 Adjusted 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.
inTEST Achieves 46.3% Gross Margin for Third Quarter 2024
Page 2 of 12
November 1, 2024
Third Quarter 2024 Review (see revenue by market and by segments in accompanying tables)
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Three Months Ended |
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($ in 000s) |
As Restated |
Change |
Change |
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9/30/2024 |
9/30/2023 |
$ |
% |
6/30/2024 |
$ |
% |
||||||||||||||||||||||
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Revenue |
$ | 30,272 | $ | 30,941 | $ | (669 | ) | -2.2 | % | $ | 33,991 | $ | (3,719 | ) | -10.9 | % | ||||||||||||
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Gross profit |
$ | 14,012 | $ | 14,447 | $ | (435 | ) | -3.0 | % | $ | 13,797 | $ | 215 | 1.6 | % | |||||||||||||
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Gross margin |
46.3 | % | 46.7 | % | 40.6 | % | ||||||||||||||||||||||
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Operating expenses (incl. intangible amort.) |
$ | 13,525 | $ | 11,979 | $ | 1,546 | 12.9 | % | $ | 13,461 | $ | 64 | 0.5 | % | ||||||||||||||
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Operating income |
$ | 487 | $ | 2,468 | $ | (1,981 | ) | -80.3 | % | $ | 336 | $ | 151 | 44.9 | % | |||||||||||||
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Operating margin |
1.6 | % | 8.0 | % | 1.0 | % | ||||||||||||||||||||||
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Net earnings |
$ | 495 | $ | 2,277 | $ | (1,782 | ) | -78.3 | % | $ | 230 | $ | 265 | 115.2 | % | |||||||||||||
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Net margin |
1.6 | % | 7.4 | % | 0.7 | % | ||||||||||||||||||||||
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Earnings per diluted share (“EPS”) |
$ | 0.04 | $ | 0.19 | $ | (0.15 | ) | -78.9 | % | $ | 0.02 | $ | 0.02 | 100.0 | % | |||||||||||||
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Adjusted net earnings (Non-GAAP)3 |
$ | 1,216 | $ | 2,707 | $ | (1,491 | ) | -55.1 | % | $ | 959 | $ | 257 | 26.8 | % | |||||||||||||
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Adjusted EPS (Non-GAAP)3 |
$ | 0.10 | $ | 0.22 | $ | (0.12 | ) | -54.5 | % | $ | 0.08 | $ | 0.02 | 25.0 | % | |||||||||||||
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Adjusted EBITDA (Non-GAAP)3 |
$ | 2,441 | $ | 3,768 | $ | (1,327 | ) | -35.2 | % | $ | 2,154 | $ | 287 | 13.3 | % | |||||||||||||
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Adjusted EBITDA margin (Non-GAAP)2 |
8.1 | % | 12.2 | % | 6.3 | % | ||||||||||||||||||||||
Sequentially, revenue was $3.7 million lower primarily due to shipments that were delayed into the fourth quarter for automated test systems and induction heating technologies. Revenue from semi, industrial and other markets demonstrated improving trends. Particularly in semi, revenue growth in back-end outpaced the decline in front-end.
Sequentially, gross profit of $14.0 million and gross margin of 46.3% improved despite lower revenue on better mix and cost actions. Higher sales of back-end semi test equipment, battery and flying probe automated test systems as well as improved operating efficiencies across most businesses contributed to the margin expansion. Operating income and margin improved reflecting mix and cost containment measures.
Year-over-year, third quarter revenue decreased $0.7 million. Alfamation contributed $5.4 million in revenue. Helping to offset the $7.1 million decline in semi revenue was $4.5 million growth in auto/EV,
$1.1 million increase in industrial revenue and $1.3 million increase in revenue for other markets.
Year-over-year, gross margin contracted 40-basis points primarily due to lower volume of the organic business and the impact of Alfamation. Operating expenses increased $1.5 million over the prior-year period. The $1.9 million incremental operating expenses related to Alfamation and the additional $0.5 million in amortization were partially offset by cost reduction efforts and reduced corporate development costs.
Net earnings for the quarter of $0.5 million, or $0.04 per diluted share, improved from $0.2 million, or $0.02 per diluted share in the trailing quarter. Adjusted net earnings (Non-GAAP)3 were $1.2 million, or $0.10 adjusted EPS (Non-GAAP) 3 compared with $1.0 million, or $0.08 adjusted EPS (Non-GAAP)3 in the second quarter of 2024.
Balance Sheet and Cash Flow Review
During the quarter, the Company generated $4.2 million in cash from operations. Cash and cash equivalents at the end of the third quarter of 2024 were $18.0 million, down $2.4 million from the end of the second quarter of 2024 reflecting cash used for debt reduction and share repurchases. During the quarter, the Company repaid approximately $5.3 million in debt and invested $1.0 million to acquire 141,117 shares at an average price of $7.38 per share. Capital expenditures were $0.5 million in the third quarter of 2024, similar to the prior-year period.
3 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.
inTEST Achieves 46.3% Gross Margin for Third Quarter 2024
Page 3 of 12
November 1, 2024
At quarter end, total debt was $16.1 million, down $5.0 million from June 30, 2024, which included the impact of the change in foreign exchange rates. At September 30, 2024, the Company had $30 million available under its delayed draw term loan facility and no borrowings under the $10 million revolving credit facility.
Third Quarter 2024 Orders and Backlog1 (see orders by market in accompanying tables)
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Three Months Ended |
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($ in 000s) |
Change |
Change |
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9/30/2024 |
9/30/2023 |
$ |
% |
6/30/2024 |
$ |
% |
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Orders |
$ | 28,054 | $ | 26,854 | $ | 1,200 | 4.5 | % | $ | 26,182 | $ | 1,872 | 7.1 | % | ||||||||||||||
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Backlog (at quarter end)* |
$ | 45,454 | $ | 40,491 | $ | 4,963 | 12.3 | % | $ | 47,672 | $ | (2,218 | ) | -4.7 | % | |||||||||||||
*Backlog as of 9/30/23 as restated
Third quarter orders of $28.1 million, including $3.9 million in orders attributable to Alfamation, grew 5% versus the prior-year period, and improved 7%, or $1.9 million, compared with the second quarter of 2024. The year-over-year increase reflects general strength across most markets although the semi market remains soft with $5.3 million, or 41%, lower orders. Orders from auto/EV, including Alfamation, increased $4.1 million, defense/aerospace increased $1.4 million, industrial grew $0.6 million, and other markets grew $1.9 million.
Sequentially, the 7% increase in orders reflects increases in auto/EV, defense/aerospace, security and other markets more than offsetting weakness in semi, industrial and life sciences.
Backlog at September 30, 2024, was $45.5 million and included $14.7 million of backlog associated with Alfamation. Approximately 42% of the backlog is expected to ship beyond the fourth quarter of 2024.
Fourth Quarter and Full Year 2024 Outlook
The Company has tightened the overall range of its expectations for the full year and is providing its fourth quarter financial guidance as shown in the table below. The Company continues to expect the effective tax rate for the year to be approximately 17% to 19%.
Fourth quarter 2024 interest expense is expected to be approximately $210,000. EPS and adjusted EPS (Non-GAAP)3 at the mid-point of the estimates for the quarter are approximately $0.08 and $0.14, respectively and is based on approximately 12,150,000 weighted average shares. Capital expenditures are expected to continue to be approximately 1% to 2% of revenue.
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(As of November 1, 2024) |
Fourth Quarter Guidance |
Full Year Guidance |
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Revenue |
$34 million to $37 million |
$128 million to $131 million |
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Gross margin |
Approximately 42% |
42% to 43% |
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Operating expenses |
Approximately $13.5 million |
Approximately $53 million |
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Intangible asset amort expense |
Approximately $0.9 million |
Approximately $3.3 million |
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Intangible asset amort exp. After tax |
Approximately $0.7 million |
Approximately $2.7 million |
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.
inTEST Achieves 46.3% Gross Margin for Third Quarter 2024
Page 4 of 12
November 1, 2024
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, November 8, 2024. To listen to the archived call, dial (412) 317-6671 and enter replay pin number 13749100. 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 https://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:
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Adjusted net earnings is derived by adding acquired intangible amortization, adjusted for the related income tax expense (benefit), to net earnings. |
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Adjusted earnings per diluted share (adjusted EPS) is derived by dividing adjusted net earnings by diluted weighted average shares outstanding. |
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Adjusted EBITDA is derived by adding acquired intangible amortization, net interest expense, income tax expense, depreciation, and stock-based compensation expense to net earnings. |
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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.
inTEST Achieves 46.3% Gross Margin for Third Quarter 2024
Page 5 of 12
November 1, 2024
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.
inTEST Achieves 46.3% Gross Margin for Third Quarter 2024
Page 6 of 12
November 1, 2024
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 “appears,” “believe,” “continue,” “could,” “expects,” “guidance,” “may,” “outlook,” “will,” “should,” “plan,” “potential,” “forecasts,” “target,” “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, 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.
Contacts:
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inTEST Corporation |
Investors: |
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Duncan Gilmour |
Deborah K. Pawlowski |
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Chief Financial Officer and Treasurer |
Alliance Advisors IR |
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Tel: (856) 505-8999 |
dpawlowski@allianceadvisors.com |
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Tel: (716) 843-3908 |
– FINANCIAL TABLES FOLLOW –
inTEST Achieves 46.3% Gross Margin for Third Quarter 2024
Page 7 of 12
November 1, 2024
inTEST CORPORATION
Consolidated Statements of Operations
(In thousands, except share and per share data)
(Unaudited)
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Three Months Ended |
Nine Months Ended |
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2024 |
2023 |
2024 |
2023 |
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As Restated |
As Restated |
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Revenue |
$ | 30,272 | $ | 30,941 | $ | 94,087 | $ | 95,418 | ||||||||
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Cost of revenue |
16,260 | 16,494 | 53,202 | 50,889 | ||||||||||||
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Gross profit |
14,012 | 14,447 | 40,885 | 44,529 | ||||||||||||
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Operating expenses: |
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Selling expense |
4,281 | 4,295 | 12,976 | 13,411 | ||||||||||||
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Engineering and product development expense |
2,182 | 1,802 | 6,382 | 5,689 | ||||||||||||
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General and administrative expense |
7,062 | 5,882 | 20,212 | 16,099 | ||||||||||||
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Total operating expenses |
13,525 | 11,979 | 39,570 | 35,199 | ||||||||||||
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Operating income |
487 | 2,468 | 1,315 | 9,330 | ||||||||||||
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Interest expense |
(219 | ) | (168 | ) | (612 | ) | (526 | ) | ||||||||
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Other income |
301 | 423 | 949 | 678 | ||||||||||||
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Earnings before income tax expense |
569 | 2,723 | 1,652 | 9,482 | ||||||||||||
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Income tax expense |
74 | 446 | 265 | 1,595 | ||||||||||||
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Net earnings |
$ | 495 | $ | 2,277 | $ | 1,387 | $ | 7,887 | ||||||||
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Earnings per common share - basic |
$ | 0.04 | $ | 0.19 | $ | 0.11 | $ | 0.70 | ||||||||
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Weighted average common shares outstanding - basic |
12,189,761 | 11,886,005 | 12,150,240 | 11,294,306 | ||||||||||||
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Earnings per common share - diluted |
$ | 0.04 | $ | 0.19 | $ | 0.11 | $ | 0.68 | ||||||||
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Weighted average common shares and common share equivalents outstanding - diluted |
12,251,712 | 12,212,317 | 12,246,763 | 11,665,850 | ||||||||||||
inTEST Achieves 46.3% Gross Margin for Third Quarter 2024
Page 8 of 12
November 1, 2024
inTEST CORPORATION
Consolidated Balance Sheets
(In thousands)
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September 30, |
December 31, |
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2024 |
2023 |
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(Unaudited) |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ | 17,972 | $ | 45,260 | ||||
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Trade accounts receivable, net of allowance for credit losses of $419 and $474, respectively |
28,357 | 18,175 | ||||||
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Inventories |
31,661 | 20,089 | ||||||
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Prepaid expenses and other current assets |
3,212 | 2,254 | ||||||
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Total current assets |
81,202 | 85,778 | ||||||
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Property and equipment: |
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Machinery and equipment |
8,848 | 7,118 | ||||||
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Leasehold improvements |
4,205 | 3,601 | ||||||
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Gross property and equipment |
13,053 | 10,719 | ||||||
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Less: accumulated depreciation |
(8,480 | ) | (7,529 | ) | ||||
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Net property and equipment |
4,573 | 3,190 | ||||||
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Right-of-use assets, net |
11,292 | 4,987 | ||||||
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Goodwill |
32,475 | 21,728 | ||||||
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Intangible assets, net |
27,877 | 16,596 | ||||||
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Deferred tax assets |
- | 1,437 | ||||||
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Restricted certificates of deposit |
100 | 100 | ||||||
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Other assets |
848 | 1,013 | ||||||
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Total assets |
$ | 158,367 | $ | 134,829 | ||||
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current liabilities: |
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Current portion of Term Note and other long-term debt |
$ | 8,269 | $ | 4,100 | ||||
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Current portion of operating lease liabilities |
1,947 | 1,923 | ||||||
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Accounts payable |
9,212 | 5,521 | ||||||
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Accrued wages and benefits |
5,009 | 4,156 | ||||||
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Accrued professional fees |
1,405 | 1,228 | ||||||
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Customer deposits and deferred revenue |
6,978 | 3,797 | ||||||
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Accrued sales commissions |
1,077 | 1,055 | ||||||
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Domestic and foreign income taxes payable |
- | 1,038 | ||||||
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Other current liabilities |
2,042 | 1,481 | ||||||
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Total current liabilities |
35,939 | 24,299 | ||||||
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Operating lease liabilities, net of current portion |
9,649 | 3,499 | ||||||
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Term Note and other long-term debt, net of current portion |
7,822 | 7,942 | ||||||
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Contingent consideration |
823 | 1,093 | ||||||
|
Deferred revenue, net of current portion |
1,208 | 1,331 | ||||||
|
Deferred tax liabilities |
761 | - | ||||||
|
Other liabilities |
1,789 | 384 | ||||||
|
Total liabilities |
57,991 | 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; 12,453,957 and 12,241,925 shares issued, respectively |
124 | 122 | ||||||
|
Additional paid-in capital |
57,218 | 54,450 | ||||||
|
Retained earnings |
43,583 | 42,196 | ||||||
|
Accumulated other comprehensive earnings |
393 | 414 | ||||||
|
Treasury stock, at cost; 79,382 and 75,758 shares, respectively |
(942 | ) | (901 | ) | ||||
|
Total stockholders' equity |
100,376 | 96,281 | ||||||
|
Total liabilities and stockholders' equity |
$ | 158,367 | $ | 134,829 | ||||
inTEST Achieves 46.3% Gross Margin for Third Quarter 2024
Page 9 of 12
November 1, 2024
inTEST CORPORATION
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
|
Nine Months Ended September 30, |
||||||||
|
2024 |
2023 |
|||||||
|
As Restated |
||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
|
Net earnings |
$ | 1,387 | $ | 7,887 | ||||
|
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: |
||||||||
|
Depreciation and amortization |
4,469 | 3,515 | ||||||
|
Provision for excess and obsolete inventory |
509 | 385 | ||||||
|
Foreign exchange (gain) loss |
(78 | ) | 17 | |||||
|
Amortization of deferred compensation related to stock-based awards |
1,450 | 1,623 | ||||||
|
Discount on shares sold under Employee Stock Purchase Plan |
20 | 21 | ||||||
|
Loss on disposal of property and equipment |
24 | 11 | ||||||
|
Proceeds from sale of rental equipment, net of gain |
148 | 153 | ||||||
|
Deferred income tax expense (benefit) |
140 | (1,101 | ) | |||||
|
Adjustment to contingent consideration liability |
- | (358 | ) | |||||
|
Changes in assets and liabilities: |
||||||||
|
Trade accounts receivable |
(3,694 | ) | 480 | |||||
|
Inventories |
(129 | ) | (9 | ) | ||||
|
Prepaid expenses and other current assets |
569 | (313 | ) | |||||
|
Other assets |
(27 | ) | (492 | ) | ||||
|
Operating lease liabilities |
(1,173 | ) | (1,275 | ) | ||||
|
Accounts payable |
(1,029 | ) | (100 | ) | ||||
|
Accrued wages and benefits |
(533 | ) | 125 | |||||
|
Accrued professional fees |
177 | 305 | ||||||
|
Customer deposits and deferred revenue |
468 | (105 | ) | |||||
|
Accrued sales commissions |
25 | (292 | ) | |||||
|
Domestic and foreign income taxes payable |
(817 | ) | (292 | ) | ||||
|
Other current liabilities |
(360 | ) | 320 | |||||
|
Deferred revenue, net of current portion |
(123 | ) | 1,033 | |||||
|
Other liabilities |
(189 | ) | (17 | ) | ||||
|
Net cash provided by operating activities |
1,234 | 11,521 | ||||||
|
CASH FLOWS FROM INVESTING ACTIVITIES |
||||||||
|
Acquisition of business, net of cash acquired |
(18,727 | ) | - | |||||
|
Purchase of property and equipment |
(1,161 | ) | (983 | ) | ||||
|
Net cash used in investing activities |
(19,888 | ) | (983 | ) | ||||
|
CASH FLOWS FROM FINANCING ACTIVITIES |
||||||||
|
Net proceeds from public offering of common stock |
- | 19,244 | ||||||
|
Repurchases of common stock |
(1,042 | ) | - | |||||
|
Repayments of short-term borrowings |
(1,856 | ) | - | |||||
|
Repayments of long-term borrowings |
(5,475 | ) | (3,075 | ) | ||||
|
Proceeds from stock options exercised |
145 | 978 | ||||||
|
Proceeds from shares sold under Employee Stock Purchase Plan |
111 | 118 | ||||||
|
Settlement of employee tax liabilities in connection with treasury stock transaction |
(41 | ) | (687 | ) | ||||
|
Net cash (used in) provided by financing activities |
(8,158 | ) | 16,578 | |||||
|
Effects of exchange rates on cash |
(476 | ) | (7 | ) | ||||
|
Net cash (used in) provided by all activities |
(27,288 | ) | 27,109 | |||||
|
Cash, cash equivalents and restricted cash at beginning of period |
45,260 | 14,576 | ||||||
|
Cash and cash equivalents at end of period |
$ | 17,972 | $ | 41,685 | ||||
|
Cash payments for: |
||||||||
|
Domestic and foreign income taxes |
$ | 1,147 | $ | 2,988 | ||||
|
Details of acquisition: |
||||||||
|
Fair value of assets acquired, net of cash |
$ | 36,055 | ||||||
|
Liabilities assumed |
(25,838 | ) | ||||||
|
Stock issued |
(2,086 | ) | ||||||
|
Goodwill resulting from acquisition |
10,596 | |||||||
|
Net cash paid for acquisition |
$ | 18,727 | ||||||
inTEST Achieves 46.3% Gross Margin for Third Quarter 2024
Page 10 of 12
November 1, 2024
inTEST CORPORATION
Revenue by Market
(In thousands)
(Unaudited)
|
($ in 000s) |
Three Months Ended |
|||||||||||||||||||||||||||||||||||||||
|
As Restated |
Change |
Change |
||||||||||||||||||||||||||||||||||||||
|
9/30/2024 |
9/30/2023 |
$ |
% |
6/30/2024 |
$ |
% |
||||||||||||||||||||||||||||||||||
|
Revenue |
||||||||||||||||||||||||||||||||||||||||
|
Semi |
$ | 11,410 | 37.6 | % | $ | 18,476 | 59.8 | % | $ | (7,066 | ) | -38.2 | % | $ | 10,124 | 29.8 | % | $ | 1,286 | 12.7 | % | |||||||||||||||||||
|
Industrial |
3,534 | 11.7 | % | 2,456 | 7.9 | % | 1,078 | 43.9 | % | 3,415 | 10.0 | % | 119 | 3.5 | % | |||||||||||||||||||||||||
|
Auto/EV |
6,250 | 20.6 | % | 1,775 | 5.7 | % | 4,475 | 252.1 | % | 10,735 | 31.6 | % | (4,485 | ) | -41.8 | % | ||||||||||||||||||||||||
|
Life Sciences |
1,322 | 4.4 | % | 1,330 | 4.3 | % | (8 | ) | -0.6 | % | 2,194 | 6.5 | % | (872 | ) | -39.7 | % | |||||||||||||||||||||||
|
Defense/Aerospace |
3,239 | 10.7 | % | 3,392 | 11.0 | % | (153 | ) | -4.5 | % | 3,682 | 10.8 | % | (443 | ) | -12.0 | % | |||||||||||||||||||||||
|
Security |
666 | 2.2 | % | 967 | 3.1 | % | (301 | ) | -31.1 | % | 792 | 2.3 | % | (126 | ) | -15.9 | % | |||||||||||||||||||||||
|
Other |
3,851 | 12.7 | % | 2,545 | 8.2 | % | 1,306 | 51.3 | % | 3,049 | 9.0 | % | 802 | 26.3 | % | |||||||||||||||||||||||||
| $ | 30,272 | 100.0 | % | $ | 30,941 | 100.0 | % | $ | (669 | ) | -2.2 | % | $ | 33,991 | 100.0 | % | $ | (3,719 | ) | -10.9 | % | |||||||||||||||||||
Orders by Market
(In thousands)
(Unaudited)
|
($ in 000s) |
Three Months Ended |
|||||||||||||||||||||||||||||||||||||||
|
Change |
Change |
|||||||||||||||||||||||||||||||||||||||
|
9/30/2024 |
9/30/2023 |
$ |
% |
6/30/2024 |
$ |
% |
||||||||||||||||||||||||||||||||||
|
Orders |
||||||||||||||||||||||||||||||||||||||||
|
Semi |
$ | 7,648 | 27.2 | % | $ | 12,935 | 48.2 | % | $ | (5,287 | ) | -40.9 | % | $ | 11,026 | 42.1 | % | $ | (3,378 | ) | -30.6 | % | ||||||||||||||||||
|
Industrial |
2,237 | 8.0 | % | 1,637 | 6.1 | % | 600 | 36.7 | % | 3,485 | 13.4 | % | (1,248 | ) | -35.8 | % | ||||||||||||||||||||||||
|
Auto/EV |
7,141 | 25.5 | % | 3,051 | 11.3 | % | 4,090 | 134.1 | % | 4,721 | 18.0 | % | 2,420 | 51.3 | % | |||||||||||||||||||||||||
|
Life Sciences |
534 | 1.9 | % | 931 | 3.5 | % | (397 | ) | -42.6 | % | 1,025 | 3.9 | % | (491 | ) | -47.9 | % | |||||||||||||||||||||||
|
Defense/Aerospace |
4,470 | 15.9 | % | 3,032 | 11.3 | % | 1,438 | 47.4 | % | 2,665 | 10.2 | % | 1,805 | 67.7 | % | |||||||||||||||||||||||||
|
Security |
1,062 | 3.8 | % | 2,212 | 8.2 | % | (1,150 | ) | -52.0 | % | 81 | 0.3 | % | 981 | 1211.1 | % | ||||||||||||||||||||||||
|
Other |
4,962 | 17.7 | % | 3,056 | 11.4 | % | 1,906 | 62.4 | % | 3,179 | 12.1 | % | 1,783 | 56.1 | % | |||||||||||||||||||||||||
| $ | 28,054 | 100.0 | % | $ | 26,854 | 100.0 | % | $ | 1,200 | 4.5 | % | $ | 26,182 | 100.0 | % | $ | 1,872 | 7.1 | % | |||||||||||||||||||||
inTEST Achieves 46.3% Gross Margin for Third Quarter 2024
Page 11 of 12
November 1, 2024
inTEST CORPORATION
Segment Data
(In thousands)
(Unaudited)
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
|
2024 |
2023 |
2024 |
2023 |
|||||||||||||
|
As Restated |
As Restated |
|||||||||||||||
|
Revenue: |
||||||||||||||||
|
Electronic Test |
$ | 15,481 | $ | 11,547 | $ | 42,756 | $ | 32,911 | ||||||||
|
Environmental Technologies |
6,734 | 7,000 | 21,835 | 23,178 | ||||||||||||
|
Process Technologies |
8,057 | 12,394 | 29,496 | 39,329 | ||||||||||||
|
Total Revenue |
$ | 30,272 | $ | 30,941 | $ | 94,087 | $ | 95,418 | ||||||||
|
Division operating income: |
||||||||||||||||
|
Electronic Test |
$ | 2,311 | $ | 3,268 | $ | 5,867 | $ | 8,487 | ||||||||
|
Environmental Technologies |
426 | 523 | 1,434 | 2,479 | ||||||||||||
|
Process Technologies |
1,070 | 2, 094 | 4,001 | 7,362 | ||||||||||||
|
Total division operating income |
3,807 | 5,885 | 11,302 | 18,328 | ||||||||||||
|
Corporate expenses |
(2,376 | ) | (2,902 | ) | (7,551 | ) | (7,416 | ) | ||||||||
|
Acquired intangible amortization |
(944 | ) | (515 | ) | (2,436 | ) | (1,582 | ) | ||||||||
|
Interest expense |
(219 | ) | (168 | ) | (612 | ) | (526 | ) | ||||||||
|
Other income |
301 | 423 | 949 | 678 | ||||||||||||
|
Earnings before income tax expense |
$ | 569 | $ | 2,723 | $ | 1,652 | $ | 9,482 | ||||||||
inTEST Achieves 46.3% Gross Margin for Third Quarter 2024
Page 12 of 12
November 1, 2024
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 |
||||||||||||
|
9/30/2024 |
9/30/2023 |
6/30/2024 |
||||||||||
|
As Restated |
||||||||||||
|
Net earnings |
$ | 495 | $ | 2,277 | $ | 230 | ||||||
|
Acquired intangible amortization |
944 | 515 | 897 | |||||||||
|
Tax adjustments |
(223 | ) | (85 | ) | (168 | ) | ||||||
|
Adjusted net earnings (Non-GAAP) |
$ | 1,216 | $ | 2,707 | $ | 959 | ||||||
|
Diluted weighted average shares outstanding |
12,252 | 12,212 | 12,330 | |||||||||
|
Earnings per diluted share:(1) |
||||||||||||
|
Net earnings |
$ | 0.04 | $ | 0.19 | $ | 0.02 | ||||||
|
Acquired intangible amortization |
0.08 | 0.04 | 0.07 | |||||||||
|
Tax adjustments |
(0.02 | ) | (0.01 | ) | (0.01 | ) | ||||||
|
Adjusted EPS (Non-GAAP) |
$ | 0.10 | $ | 0.22 | $ | 0.08 | ||||||
(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 |
||||||||||||
|
9/30/2024 |
9/30/2023 |
6/30/2024 |
||||||||||
|
As Restated |
||||||||||||
|
Net earnings |
$ | 495 | $ | 2,277 | $ | 230 | ||||||
|
Acquired intangible amortization |
944 | 515 | 897 | |||||||||
|
Net interest (income) expense |
36 | (276 | ) | 41 | ||||||||
|
Income tax expense |
74 | 446 | 66 | |||||||||
|
Depreciation |
355 | 262 | 356 | |||||||||
|
Non-cash stock-based compensation |
537 | 544 | 564 | |||||||||
|
Adjusted EBITDA (Non-GAAP) |
$ | 2,441 | $ | 3,768 | $ | 2,154 | ||||||
|
Revenue |
30,272 | 30,941 | 33,991 | |||||||||
|
Net margin |
1.6 | % | 7.4 | % | 0.7 | % | ||||||
|
Adjusted EBITDA margin (Non-GAAP) |
8.1 | % | 12.2 | % | 6.3 | % | ||||||
Reconciliation of Fourth Quarter 2024 Estimated Earnings Per Diluted Share to Estimated Adjusted EPS (Non-GAAP):
|
Estimated |
||||
|
Estimated earnings per diluted share |
$ | ~0.08 | ||
|
Estimated acquired intangible amortization |
~0.08 | |||
|
Estimated tax adjustments |
~(0.02 | ) | ||
|
Estimated adjusted EPS (Non-GAAP) |
$ | ~0.14 | ||
###