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inTEST Reports 2019 Fourth Quarter and Year End Financial Results

inTEST Reports 2019 Fourth Quarter and Year End Financial Results

Feb 28, 2020

MANSFIELD, Mass., Feb. 28, 2020 (GLOBE NEWSWIRE) -- inTEST Corporation (NYSE American: INTT), a global supplier of precision-engineered solutions for use in manufacturing and testing across a wide range of markets including automotive, defense/aerospace, energy, industrial, semiconductor and telecommunications, today announced financial results for the quarter and full year ended December 31, 2019.

2019 Fourth Quarter Financial Summary

($ in Millions, Except Per Share Data) Three Months Ended
  12/31/2019 9/30/2019 12/31/2018
Semi Market Bookings (1) $   4.6   $   6.6   $   10.8  
Multimarket Bookings (2)     6.5       7.3       7.6  
Total Bookings $   11.1   $   13.9   $   18.4  
       
Semi Market Bookings (1) - % of Total Bookings     41 %     48 %     59 %
Multimarket Bookings (2) - % of Total Bookings     59 %     52 %     41 %
       
Semi Market Net Revenues (1) $   6.1   $   7.1   $   10.3  
Multimarket Net Revenues (2)     7.5       7.5       8.1  
Total Net Revenues $   13.6   $   14.6   $   18.4  
       
Semi Market Net Revenues (1) - % of Total Net Revenues     45 %     49 %     56 %
Multimarket Net Revenues (2) - % of Total Net Revenues     55 %     51 %     44 %
       
Gross Margin $   6.5   $   7.2   $    9.0  
Gross Margin     48 %     49 %     49 %
       
Net Earnings (Loss) (GAAP) (3) $    0.7   $    0.6   $   (0.8 )
Net Earnings (Loss) per diluted share (GAAP) (3) $    0.07   $    0.06   $   (0.08 )
       
Adjusted Net Earnings (Non-GAAP) (4) $   1.0   $   1.0   $   2.3  
Adjusted Net Earnings per diluted share (Non-GAAP) (4) $   0.10   $   0.09   $   0.23  
       
Adjusted EBITDA (Non-GAAP) (4) $   1.1   $   1.3   $   2.8  
       
  As of
  12/31/2019 9/30/2019 12/31/2018
Cash and cash equivalents $   7.6   $   8.0   $   17.9  


(1 ) Semi Market:  These amounts include all bookings and net revenues from the semiconductor market.
   
(2 ) Multimarket:  Formerly referred to as “Non Semi Bookings” and “Non Semi Net Revenues.”  These amounts include all bookings and net revenues from markets other than the semiconductor market.
   
(3 ) Consolidated results for the fourth quarter of 2018 include a $2.8 million increase in the liability for contingent consideration.
   
(4 ) There were no adjustments for contingent consideration in 2019. Further information can be found under “Non-GAAP Results.” See also the reconciliation of GAAP financial measures to non-GAAP financial measures that accompanies this earnings release.

2019 Year End Financial Summary

($ in Millions, Except Per Share Data) Years Ended
  12/31/2019 12/31/2018
Semi Market Bookings (5) $   25.4   $   45.9  
Multimarket Bookings (6)     27.4       32.3  
Total Bookings $   52.8   $   78.2  
     
Semi Market Bookings (5) - % of Total Bookings     48 %     59 %
Multimarket Bookings (6) - % of Total Bookings     52 %     41 %
     
Semi Market Net Revenues (5) $   31.0   $   45.4  
Multimarket Net Revenues (6)     29.7       33.2  
Total Net Revenues $   60.7   $   78.6  
     
Semi Market Net Revenues (5) - % of Total Net Revenues     51 %     58 %
Multimarket Net Revenues (6) - % of Total Net Revenues     49 %     42 %
     
Gross Margin $   29.2   $   39.4  
Gross Margin     48 %     50 %
     
Net Earnings (GAAP) (7) $   2.3   $   3.0  
Net Earnings per diluted share (GAAP) (7) $   0.22   $   0.29  
     
Adjusted Net Earnings (Non-GAAP) (8) $   3.6   $   11.0  
Adjusted Net Earnings per diluted share (Non-GAAP) (8) $   0.34   $   1.06  
     
Adjusted EBITDA (Non-GAAP) (8) $   4.5   $   13.8  


(5 ) Semi Market: These amounts include all bookings and net revenues from the semiconductor market.
   
(6 ) Multimarket:  Formerly referred to as “Non Semi Bookings” and “Non Semi Net Revenues.” These amounts include all bookings and net revenues from markets other than the semiconductor market.
   
(7 ) For the year ended December 31, 2018, Net Earnings (GAAP) and Net Earnings per diluted share (GAAP) include the impact of an increase in the liability for contingent consideration of $6.9 million and the reversal of the $476,000 Federal transition tax payable that was estimated during the quarter ended December 31, 2017 under new tax legislation. During the year ended December 31, 2018, we determined that this tax was not due.
   
(8 ) There were no adjustments for contingent consideration in 2019. Further information can be found under “Non-GAAP Results.” See also the reconciliation of GAAP financial measures to non-GAAP financial measures that accompanies this earnings release.
   

2019 Fiscal Year Highlights

  • 2019 Thermal segment highlights included:
    • Defense/aerospace continued to play an important role, with applications identified for a variety of products intended for satellite, tactical, and secure communications applications, including Thermonics® Chillers and Sigma test products, which drove Multimarket business.
    • We continue to find new applications for Thermostreams®; a new medical customer uses the system for testing of electronics for defibrillators, a critical component in treating cardiac arrest, and a new customer employs the equipment in thermal testing for long wave infrared cameras.
    • Chillers had a record bookings year for 2019 and continued to gain traction in the expanding cannabis industry, with eight new customers placing orders during the year.
    • Significant EKOHEAT™ induction heating equipment systems orders continued; an Original Equipment Manufacturer (OEM) placed orders for use in automotive preheating applications, becoming our third largest induction heating customer. In addition, an integrator placed an induction heating tool order for a production cell being delivered to an electric vehicle manufacturer.
    • The personal healthcare market continues to present solid opportunities, with important orders for induction heating tools received for the packaging of personal care products.

  • 2019 EMS segment highlights included:
    • EMS partnered with an OEM to support its development of a new 5G test system.
    • Significant probe docking system orders were placed by a major US-based fabless semiconductor manufacturer.
    • An OEM in automotive applications test placed a large manipulator order, further demonstrating our value to the semiconductor related automotive industry.

inTEST President & CEO James Pelrin commented, “Fourth quarter results reflect the challenging headwinds our semiconductor customers continue to experience. Consolidated net revenues were below our expectations, due primarily to continued weakness in the analog production test portion of our semiconductor business. Despite the reduction in revenue, gross margin and GAAP EPS were both within guidance; and with our continued focus on operational efficiency as well as cost controls, we delivered favorable GAAP net earnings per diluted share.”

Mr. Pelrin continued, “A major driver of our Thermal business is the defense/aerospace industry; and we are seeing an uptick across many applications including front-end related Semiconductors, specifically silicon carbide related crystal growth and deposition.”

2020 First Quarter Financial Outlook
inTEST’s guidance for the 2020 first quarter includes both GAAP and non-GAAP estimates. A reconciliation between these GAAP and non-GAAP financial measures is included below.

Actual results may differ materially as a result of, among other things, the factors described under “Forward-Looking Statements” below.

inTEST expects that net revenues for the first quarter of 2020 will be in the range of $11.0 million to $12.5 million and that we will incur a net loss per diluted share ranging from $(0.07) to $(0.14). On a non-GAAP basis, adjusted net loss per diluted share is expected to be in the range of $(0.04) to $(0.11). In addition, we expect that gross margin will range from 43% to 44%. This outlook is based on the Company’s current views with respect to operating and market conditions and customers’ forecasts, which are subject to change.

“Our guidance reflects the continued softness in the analog production test sector as well as the evolving uncertainty surrounding the coronavirus outbreak,” noted Mr. Pelrin. “We are closely monitoring this outbreak and its impact on our customers and our operating results.”

Mr. Pelrin concluded, “While Semi market related variabilities are an inherent aspect of our business, we are confident in our long-term diversification strategy of maximizing our Semi business while expanding inTEST’s Multimarket footprint. Our customer base continues to grow, testament to the value of our technologies and the demand for our products. We continue to strive to excel with our capabilities to deliver precision-engineered thermal, mechanical and electronic solutions, and believe we are well positioned to participate as the semiconductor industry rebounds.”

2019 Fourth Quarter and Year-Ended Supplemental Information and Conference Call Details
inTEST is providing Supplemental Information (“Information”) in combination with its press release. This Information is offered to provide shareholders and analysts with additional time and detail for analyzing the Company’s financial results in advance of the Company’s quarterly conference call. The Information will be available in conjunction with the press release at inTEST’s website www.intest.com, under the “Investors” section.

inTEST management will host a conference call on Friday, February 28, 2020 at 8:30 am Eastern Standard Time. The conference call will address the Company’s 2019 fourth quarter financial results, and management’s current expectations and views of the industry. The call may also include discussion of strategic, operating, product initiatives or developments, or other matters relating to the Company’s current or future performance. To access the live conference call, please dial (323) 794-2598 or (800) 458-4121. The passcode for the conference call is 1878028. Please reference the inTEST 2019 Q4 and Year-End Financial Results Conference Call.

2019 Fourth Quarter and Year-End Live Webcast Details
inTEST Corporation will provide a webcast in conjunction with the conference call. To access the live webcast, please visit inTEST’s website www.intest.com under the “Investors” section.

2019 Fourth Quarter and Year-End Replay Details (Webcast)
A replay of the webcast will be available on inTEST’s website for one year following the live broadcast. To access the webcast replay, please visit inTEST’s website www.intest.com under the “Investors” section.

Submit Questions
In advance of the conference call, and for those investors accessing the webcast, inTEST Corporation welcomes individual investors to submit their questions via email to laura@ga-ir.com.

Non-GAAP Results
In addition to disclosing results that are determined in accordance with GAAP, we also disclose non-GAAP financial measures. These non-GAAP financial measures include adjusted net earnings (loss), adjusted net earnings (loss) per diluted share, EBITDA and adjusted EBITDA. Adjusted net earnings (loss) is derived by adding acquired intangible amortization, adjusted for the related income tax expense (benefit), to net earnings (loss) and removing any change in the fair value of our contingent consideration liability from net earnings (loss). Adjusted net earnings (loss) per diluted share is derived by dividing adjusted net earnings (loss) by diluted weighted average shares outstanding. EBITDA is derived by adding acquired intangible amortization, interest expense, income tax expense, and depreciation to net earnings (loss). Adjusted EBITDA is derived by removing any change in the fair value of our contingent consideration liability from EBITDA. These results are provided as a complement to the results provided in accordance with GAAP. Adjusted net earnings (loss), adjusted net earnings (loss) per diluted share, EBITDA and adjusted EBITDA are non-GAAP financial measures presented to provide investors with meaningful, supplemental information regarding our baseline performance before acquired intangible amortization charges and changes in the estimate of future consideration that may be paid out related to prior acquisitions as these expenses or income items may not be indicative of our current core business or future outlook. These non-GAAP financial measures 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. A reconciliation from net earnings (loss) and net earnings (loss) per diluted share to adjusted net earnings (loss) and adjusted net earnings (loss) per diluted share and from net earnings (loss) to EBITDA and adjusted EBITDA, which are discussed in this earnings release, is contained in the tables below. The non-GAAP financial measures discussed in this earnings release may not be comparable to similarly titled measures used by other companies. The presentation of non-GAAP financial measures is not meant to be considered in isolation, as a substitute for, or superior to, financial measures or information provided in accordance with GAAP.

About inTEST Corporation
inTEST Corporation is a global supplier of precision-engineered solutions for use in manufacturing and testing across a wide range of markets including automotive, defense/aerospace, energy, industrial, semiconductor and telecommunications. Backed by decades of engineering expertise and a culture of operational excellence, we solve difficult thermal, mechanical and electronic challenges for customers worldwide while generating strong cash flow and profits. Our strategy uses these strengths to grow and increase shareholder value by maximizing our businesses and by identifying, acquiring and optimizing complementary businesses. For more information visit www.intest.com.

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 our plans, strategies and intentions, or our future performance or goals, that are based upon management's current expectations. Our forward-looking statements can often be identified by the use of forward-looking terminology such as “believes,” “expects,” “intends,” “may,” “will,” “should,” “plans,” “projects,” “forecasts,” “outlook,” or “anticipates” 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. In addition to the factors mentioned in this press release, such risks and uncertainties include, but are not limited to, the potential impact of the coronavirus outbreak on our business; indications of a change in the market cycles in the Semi Market or other markets we serve; changes in business conditions and general economic conditions both domestically and globally; changes in the demand for semiconductors, generally; the success of our strategy to diversify our business by entering markets outside the Semi Market; the possibility of future acquisitions or dispositions and the successful integration of any acquired operations; the ability to borrow funds or raise capital to finance major potential acquisitions; changes in the rates of, and timing of, capital expenditures by our customers; progress of product development programs; increases in raw material and fabrication costs associated with our products; and other risk factors set forth from time to time in our Securities and Exchange Commission filings, including, but not limited to, our periodic reports on Form 10-K and Form 10-Q.  Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks to circumstances only as of the date on which it is made. We undertake 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.

– tables follow –

SELECTED FINANCIAL DATA
(Unaudited)
(In thousands, except per share data)

Condensed Consolidated Statements of Operations Data:

  Three Months Ended   Years Ended
  12/31/2019   12/31/2018   9/30/2019   12/31/2019   12/31/2018
                   
Net revenues $ 13,614     $ 18,435     $ 14,632     $ 60,660   $ 78,563  
Gross margin   6,465       9,004       7,205       29,225     39,401  
Operating expenses:                  
  Selling expense    1,955       2,306       2,044       8,460     9,611  
  Engineering and product development expense    1,211       1,175       1,261       4,964     4,908  
  General and administrative expense    2,703       3,158       3,094       13,252     12,801  
  Adjustment to contingent consideration liability    -       2,828       -       -     6,901  
Operating income (loss)    596       (463 )     806       2,549     5,180  
Other income (loss)   52       (34 )     (12 )     55     (137 )
Earnings (loss) before income tax expense   648       (497 )     794       2,604     5,043  
Income tax expense (benefit)   (76 )     295       147       282     2,006  
Net earnings (loss)    724       (792 )     647       2,322     3,037  
                   
Net earnings (loss) per share – basic  $   0.07     $   (0.08 )   $   0.06     $   0.22   $   0.29  
Weighted average shares outstanding – basic   10,275       10,367       10,421       10,373     10,348  
                   
Net earnings (loss) per share – diluted  $   0.07     $   (0.08 )   $   0.06     $   0.22   $   0.29  
Weighted average shares outstanding – diluted   10,299       10,367       10,430       10,392     10,382  

Condensed Consolidated Balance Sheets Data:

  As of:
  12/31/2019   9/30/2019   12/31/2018
           
Cash and cash equivalents  $   7,612   $   8,025   $ 17,861
Trade accounts receivable, net    9,296     9,223     10,563
Inventories    7,182     7,721     6,520
Total current assets   24,895     25,874     35,621
Net property and equipment    2,420     2,423     2,717
Total assets   59,715     61,305     67,187
Accounts payable    1,984     2,728     1,787
Accrued expenses    4,207     4,683     6,764
Total current liabilities    8,361     9,596     21,418
Noncurrent liabilities    6,520     6,940     2,889
Total stockholders' equity    44,834     44,769     42,880


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

  Three Months Ended   Years Ended
  12/31/2019   12/31/2018   9/30/2019   12/31/2019   12/31/2018
                   
Net earnings (loss) (GAAP)  $   724    $   (792 )   $   647      $   2,322      $   3,037   
  Acquired intangible amortization    313      317        312        1,257        1,103   
  Contingent consideration liability adjustment       2,828                    6,901   
  Tax adjustments       (4  )     (4  )     (9 )     (22 )
Adjusted net earnings (Non-GAAP)  $   1,040    $   2,349      $   955      $   3,570      $ 11,019   
                   
Diluted weighted average shares outstanding    10,299      10,396        10,430        10,392        10,382   
                   
Net earnings (loss) per share – diluted:                  
  Net earnings (loss) (GAAP) $    0.07    $   (0.08 )   $    0.06      $   0.22      $   0.29   
  Acquired intangible amortization    0.03      0.03        0.03        0.12        0.11   
  Contingent consideration liability adjustment       0.28                    0.66   
  Tax adjustments                          
Adjusted net earnings per share – diluted (Non-GAAP) $   0.10    $   0.23      $   0.09      $   0.34      $   1.06   
                   

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

  Three Months Ended   Years Ended
  12/31/2019   12/31/2018   9/30/2019   12/31/2019   12/31/2018
                   
Net earnings (loss) (GAAP)  $    724      $    (792 )   $    647    $   2,322    $   3,037 
  Acquired intangible amortization    313        317        312      1,257      1,103 
  Interest expense                      
  Income tax expense (benefit)   (76  )     295        147      282      2,006 
  Depreciation    150        184        170      685      768 
EBITDA (Non-GAAP)   1,111              1,276      4,546      6,915 
  Contingent consideration liability adjustment         2,828                6,901 
Adjusted EBITDA (Non-GAAP) $   1,111      $   2,832      $   1,276    $   4,546    $ 13,816 
                   

Supplemental Information – Reconciliation of First Quarter 2020 Estimated Net Earnings Per Share – Diluted (GAAP) to Estimated Adjusted Net Earnings Per Share – Diluted (Non-GAAP):

  Low   High
       
Estimated net loss per share – diluted (GAAP)  $ (0.14 )   $ (0.07 )
  Estimated acquired intangible amortization    0.03       0.03  
  Estimated tax adjustments    -       -  
Estimated adjusted net loss per share – diluted (Non-GAAP) $ (0.11  )   $ (0.04 )
Contacts
inTEST Corporation                                                    
Hugh T. Regan, Jr.                                                       
Treasurer and Chief Financial Officer                      
Tel: 856-505-8999                                                      

Investors:
Laura Guerrant-Oiye, Principal
Guerrant Associateslaura@ga-ir.com
Tel: (808) 960-2642                                                      

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