2018 Investor Presentation

inTEST Reports Record Revenue of $32.6 Million for the 2023 Second Quarter with Net Earnings Growth of 32% Year-over-Year

August 4, 2023 at 6:30 AM EDT
  • Continued execution of 5-Point Strategy generated 10% revenue growth year-over-year achieving upper end of guidance range
  • Demonstrated strong operating leverage with 22.6% operating income growth year-over-year to $3.3 million
  • Delivered net earnings of $2.8 million, up 32.0% for a net margin of 8.6%, and earnings per diluted share of $0.24, up 20% over prior-year period
  • Adjusted EBITDA (Non-GAAP)(1) was $4.8 million and adjusted EBITDA margin (Non-GAAP)(1) was 14.7%
  • Completed $20 Million At-The-Market Offering at an Average Sales Price of $21.70 per Share
  • Updating full year revenue guidance to $127 million to $131 million

MT. LAUREL, N.J.--(BUSINESS WIRE)--Aug. 4, 2023-- inTEST Corporation (NYSE American: INTT), a global supplier of innovative test and process technology solutions for use in manufacturing and testing in key target markets which include automotive/EV, defense/aerospace, industrial, life sciences, security, and semiconductor (“semi”), today announced financial results for the quarter ended June 30, 2023.

Nick Grant, President and CEO, commented, “The inTEST team continues to deliver to plan and we believe our efforts to diversify our markets have served us well. Sales grew year-over-year in the semiconductor markets, particularly in the backend with continued demand for our high quality, custom manipulators, integrated docking and electrical interface solutions for mixed-signal and analog integrated circuit production testing. There was also strong demand for our thermal test solutions for the defense/aerospace markets, our industrial grade image capture technology for the security industry, and a breadth of our solutions for other markets. Encouragingly, orders were up 2% sequentially driven by demand from our industrial, defense/aerospace, automotive/EV, security and other markets. This included new orders for our Thermonics chillers for testing, development and production of high-powered traction inverters used in EVs, as well as the growing recognition of our induction heating solutions as an environmentally preferred technology in many industrial applications.”

He continued, “We are actively executing on our initiatives to expand our market presence, develop new products, and identify opportunities for increased aftermarket support. We are building the talent pool and culture to achieve our goals while also continuing to pursue acquisition targets to enhance our product offerings, expand our addressable markets and deepen our presence in our served industries.”

(1) 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.

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

 

Three Months Ended

($ in 000s)

   

Change

 

Change

 

6/30/2023

6/30/2022

$

%

3/31/2023

$

%

Revenue

$32,558

$29,571

$2,987

10.1%

$31,919

$639

2.0%

Gross profit

$15,030

$13,548

$1,482

10.9%

$15,052

($22)

-0.1%

Gross margin

46.2%

45.8%

 

 

47.2%

   

Operating expenses (incl. intangible amort.)

$11,686

$10,820

$866

8.0%

$11,534

$152

1.3%

Operating income

$3,344

$2,728

$616

22.6%

$3,518

($174)

-4.9%

Operating margin

10.3%

9.2%

 

 

11.0%

   

Net earnings

$2,793

$2,116

$677

32.0%

$2,817

($24)

-0.9%

Net margin

8.6%

7.2%

 

 

8.8%

 

 

Earnings per diluted share (“EPS”)

$0.24

$0.20

$0.04

20.0%

$0.25

($0.01)

-4.0%

Adjusted net earnings (Non-GAAP) (2)

$3,227

$2,719

$508

18.7%

$3,269

($42)

-1.3%

Adjusted EPS (Non-GAAP) (2)

$0.28

$0.25

$0.03

12.0%

$0.29

($0.01)

-3.4%

Adjusted EBITDA (Non-GAAP) (2)

$4,795

$4,193

$602

14.4%

$4,826

($31)

-0.6%

Adjusted EBITDA margin (Non-GAAP) (2)

14.7%

14.2%

   

15.1%

   

(2) 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 $3.0 million, or 10%. Revenue related to the defense/aerospace industry more than doubled to $3.9 million from higher sales of thermal test chambers and flying probe test sets. Semiconductor industry revenue of $18.8 million was up 15% from strong sales for both front-end applications of induction heating solutions for silicon carbide and epitaxy crystal growth and traditional back-end semi testing applications.

Compared with the first quarter of 2023, growth in semi market revenue was primarily driven by higher front-end related sales, which increased 27%. Defense/aerospace revenue was up 37% driven by greater sales of thermal test chambers. Sales to industrial, automotive/EV, life sciences and security experienced modest declines sequentially primarily reflecting the variability in timing of customer needs from quarter to quarter.

Gross margin expanded 40 basis points compared with the prior-year period. On a sequential basis, it contracted 100 basis points and was in line with guidance. Gross margin in the first quarter of 2023 benefitted from favorable product mix.

Operating expenses were up $0.9 million over the prior-year period, reflecting annual merit increases and continued investments in engineering, sales and marketing. Nonetheless, second quarter operating expenses as a percent of revenue improved to 35.9% compared with 36.6% in last year’s second quarter, which we believe demonstrates continued operating leverage improvement as sales grow. This operating leverage improvement contributed to the 22.6% growth in operating income compared with last year’s second quarter.

Balance Sheet and Cash Flow Review

Cash and cash equivalents at the end of the reported period were $37.4 million. This was an increase of $22.0 million over the trailing first quarter of 2023, reflecting $2.9 million in cash generated by operations combined with

$19.2 million in net proceeds from the recently completed At-The-Market (“ATM”) equity offering. At quarter end, total debt was $14.1 million, down $1.0 million from March 31, 2023. For the first half of 2023, the Company generated $5.3 million in cash from operations assisted by improving working capital efficiencies as supply chains normalized, enabling inventory improvements.

Capital expenditures were $375,000 in the 2023 second quarter, similar to last year’s second quarter. For the first six months, capital expenditures were $709,000, also in line with last year.

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

 

Three Months Ended

 

 

 

Change

 

Change

 

6/30/2023

6/30/2022

$

%

3/31/2023

$

%

Orders

$31,431

$40,518

$(9,087)

-22.4%

$30,824

$607

2.0%

Backlog (at quarter end)

$44,578

$45,981

$(1,403)

-3.1%

$45,705

$(1,127)

-2.5%

Orders received in the second quarter were 22% lower compared with the record level achieved in the prior-year period. Increased demand from the industrial, defense/aerospace and automotive/EV markets helped to offset lower demand from the semi, life sciences, security and other markets. Orders more than doubled for the industrial markets, grew 70% in defense/aerospace, and increased 19% in automotive/EV. Sequentially, orders grew across most markets with notable strength in security, defense/aerospace, automotive/EV, industrial and other markets.

Backlog at June 30, 2023, was $44.6 million, down 3.1% and 2.5% from June 30, 2022 and March 31, 2023, respectively. Approximately 45% of backlog is expected to ship beyond the third quarter of 2023.

Third Quarter and Full Year 2023 Outlook

Revenue for the third quarter of 2023 is expected to be similar to the second quarter with gross margin of approximately 46%. Third quarter 2023 operating expenses, including amortization, are also expected to be similar to the second quarter. Intangible asset amortization is expected to be approximately $520,000 pre-tax, which is approximately $430,000 after tax, or $0.03 per share. Interest expense is expected to be approximately $175,000 for the quarter and the effective tax rate is expected to be approximately 16% to 17% for the year. The Company should benefit from interest income due to its higher cash balance which should mostly offset the increase in weighted average shares from the recently completed ATM. Weighted average shares are expected to be about 12.4 million in the third quarter.

Third quarter 2023 estimated EPS is expected to be in the range of $0.20 to $0.24, while third quarter estimated adjusted EPS (Non-GAAP)(3) is expected to be in the range of $0.23 to $0.27.

For the full year of 2023, based on strong second quarter results, the Company is updating its guidance as follows:

(as of August 4, 2023)

Current 2023 Guidance

Previous Guidance

Revenue

$127 million to $131 million

$125 million to $130 million

Gross margin

~46%

~46% to ~47%

Operating expenses

$46 million to $47 million

$45 million to $47 million

Intangible asset amort expense

Unchanged

~$2.1 million

Intangible asset amort exp. after tax

Unchanged

~$1.7 million

Effective tax rate

Unchanged

16% to 17%

Capital expenditures

Unchanged

1% to 2% of sales

Weighted average share count

~12.4 million in Q3 2023

NA

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.

_________________________________________

(3) Third 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, August 11, 2023. To listen to the archived call, dial (412) 317-6671 and enter replay pin number 13739637. 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 the following key performance metrics to analyze and measure the Company’s financial performance and results of operations: orders and backlog. 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 “continue,” “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
June 30,

 

 

Six Months Ended
June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

32,558

 

 

$

29,571

 

 

$

64,477

 

 

$

53,652

 

Cost of revenue

 

 

17,528

 

 

 

16,023

 

 

 

34,395

 

 

 

29,091

 

Gross profit

 

 

15,030

 

 

 

13,548

 

 

 

30,082

 

 

 

24,561

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling expense

 

 

4,661

 

 

 

4,033

 

 

 

9,116

 

 

 

7,489

 

Engineering and product development expense

 

 

1,983

 

 

 

1,859

 

 

 

3,887

 

 

 

3,783

 

General and administrative expense

 

 

5,042

 

 

 

4,928

 

 

 

10,217

 

 

 

9,759

 

Total operating expenses

 

 

11,686

 

 

 

10,820

 

 

 

23,220

 

 

 

21,031

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

3,344

 

 

 

2,728

 

 

 

6,862

 

 

 

3,530

 

Interest expense

 

 

(176

)

 

 

(141

)

 

 

(358

)

 

 

(278

)

Other income (expense)

 

 

197

 

 

 

(17

)

 

 

255

 

 

 

(27

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings before income tax expense

 

 

3,365

 

 

 

2,570

 

 

 

6,759

 

 

 

3,225

 

Income tax expense

 

 

572

 

 

 

454

 

 

 

1,149

 

 

 

532

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings

 

$

2,793

 

 

$

2,116

 

 

$

5,610

 

 

$

2,693

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share - basic

 

$

0.25

 

 

$

0.20

 

 

$

0.51

 

 

$

0.25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding - basic

 

 

11,241,183

 

 

 

10,653,268

 

 

 

10,998,456

 

 

 

10,635,270

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share - diluted

 

$

0.24

 

 

$

0.20

 

 

$

0.49

 

 

$

0.25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares and common share equivalents outstanding - diluted

 

 

11,696,569

 

 

 

10,814,799

 

 

 

11,392,617

 

 

 

10,828,696

 

inTEST CORPORATION

Consolidated Balance Sheets

(In thousands)

 

 

June 30,

 

 

December 31,

 

 

 

2023

 

 

2022

 

 

 

(Unaudited)

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

37,435

 

 

$

13,434

 

Restricted cash

 

 

-

 

 

 

1,142

 

Trade accounts receivable, net of allowance for credit losses of $501 and $496, respectively

 

 

21,581

 

 

 

21,215

 

Inventories

 

 

23,070

 

 

 

22,565

 

Prepaid expenses and other current assets

 

 

1,495

 

 

 

1,695

 

Total current assets

 

 

83,581

 

 

 

60,051

 

Property and equipment:

 

 

 

 

 

 

 

 

Machinery and equipment

 

 

6,779

 

 

 

6,625

 

Leasehold improvements

 

 

3,520

 

 

 

3,242

 

Gross property and equipment

 

 

10,299

 

 

 

9,867

 

Less: accumulated depreciation

 

 

(7,081

)

 

 

(6,735

)

Net property and equipment

 

 

3,218

 

 

 

3,132

 

Right-of-use assets, net

 

 

5,177

 

 

 

5,770

 

Goodwill

 

 

21,707

 

 

 

21,605

 

Intangible assets, net

 

 

17,613

 

 

 

18,559

 

Deferred tax assets

 

 

965

 

 

 

280

 

Restricted certificates of deposit

 

 

100

 

 

 

100

 

Other assets

 

 

496

 

 

 

569

 

Total assets

 

$

132,857

 

 

$

110,066

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Current portion of Term Note

 

$

4,100

 

 

$

4,100

 

Current portion of operating lease liabilities

 

 

1,731

 

 

 

1,645

 

Accounts payable

 

 

5,735

 

 

 

7,394

 

Accrued wages and benefits

 

 

3,570

 

 

 

3,907

 

Accrued professional fees

 

 

1,010

 

 

 

884

 

Customer deposits and deferred revenue

 

 

5,176

 

 

 

4,498

 

Accrued sales commissions

 

 

1,202

 

 

 

1,468

 

Domestic and foreign income taxes payable

 

 

1,184

 

 

 

1,409

 

Other current liabilities

 

 

1,660

 

 

 

1,564

 

Total current liabilities

 

 

25,368

 

 

 

26,869

 

Operating lease liabilities, net of current portion

 

 

3,959

 

 

 

4,705

 

Term Note, net of current portion

 

 

9,992

 

 

 

12,042

 

Contingent consideration

 

 

1,063

 

 

 

1,039

 

Other liabilities

 

 

411

 

 

 

455

 

Total liabilities

 

 

40,793

 

 

 

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; 12,185,220 and 11,063,271 shares issued, respectively

 

 

122

 

 

 

111

 

Additional paid-in capital

 

 

53,296

 

 

 

31,987

 

Retained earnings

 

 

38,464

 

 

 

32,854

 

Accumulated other comprehensive earnings

 

 

470

 

 

 

218

 

Treasury stock, at cost; 38,514 and 34,308 shares, respectively

 

 

(288

)

 

 

(214

)

Total stockholders' equity

 

 

92,064

 

 

 

64,956

 

Total liabilities and stockholders' equity

 

$

132,857

 

 

$

110,066

 

 

inTEST CORPORATION

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

Six Months Ended
June 30,

 

 

 

2023

 

 

2022

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

Net earnings

 

$

5,610

 

 

$

2,693

 

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

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

2,350

 

 

 

2,528

 

Provision for excess and obsolete inventory

 

 

266

 

 

 

230

 

Foreign exchange (gain) loss

 

 

(47

)

 

 

98

 

Amortization of deferred compensation related to stock-based awards

 

 

1,079

 

 

 

923

 

Discount on shares sold under Employee Stock Purchase Plan

 

 

14

 

 

 

18

 

Loss on disposal of property and equipment

 

 

98

 

 

 

61

 

Deferred income tax benefit

 

 

(685

)

 

 

(805

)

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Trade accounts receivable

 

 

(372

)

 

 

(6,607

)

Inventories

 

 

(693

)

 

 

(4,894

)

Prepaid expenses and other current assets

 

 

212

 

 

 

(87

)

Other assets

 

 

2

 

 

 

(395

)

Operating lease liabilities

 

 

(849

)

 

 

(701

)

Accounts payable

 

 

(1,607

)

 

 

3,506

 

Accrued wages and benefits

 

 

(351

)

 

 

(981

)

Accrued professional fees

 

 

117

 

 

 

(471

)

Customer deposits and deferred revenue

 

 

625

 

 

 

(264

)

Accrued sales commissions

 

 

(266

)

 

 

219

 

Domestic and foreign income taxes payable

 

 

(220

)

 

 

(477

)

Other current liabilities

 

 

76

 

 

 

264

 

Other liabilities

 

 

(17

)

 

 

61

 

Net cash provided by (used in) operating activities

 

 

5,342

 

 

 

(5,081

)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Refund of final working capital adjustment related to Acculogic

 

 

-

 

 

 

371

 

Purchase of property and equipment

 

 

(709

)

 

 

(708

)

Purchase of short-term investments

 

 

-

 

 

 

(3,477

)

Net cash used in investing activities

 

 

(709

)

 

 

(3,814

)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Net proceeds from public offering of common stock

 

 

19,244

 

 

 

-

 

Repayments of Term Note

 

 

(2,050

)

 

 

(1,908

)

Proceeds from shares sold under Employee Stock Purchase Plan

 

 

83

 

 

 

103

 

Proceeds from stock options exercised

 

 

900

 

 

 

-

 

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

 

 

(74

)

 

 

(10

)

Net cash provided by (used in) financing activities

 

 

18,103

 

 

 

(1,815

)

 

 

 

 

 

 

 

 

 

Effects of exchange rates on cash

 

 

123

 

 

 

58

 

 

 

 

 

 

 

 

 

 

Net cash provided by (used in) all activities

 

 

22,859

 

 

 

(10,652

)

Cash and cash equivalents at beginning of period

 

 

14,576

 

 

 

21,195

 

Cash and cash equivalents at end of period

 

$

37,435

 

 

$

10,543

 

 

 

 

 

 

 

 

 

 

Cash payments for:

 

 

 

 

 

 

 

 

Domestic and foreign income taxes

 

$

2,060

 

 

$

1,865

 

inTEST CORPORATION

Revenue by Market

(In thousands)

(Unaudited)

($ in 000s)

Three Months Ended

         

Change

   

Change

 

6/30/2023

6/30/2022

$

%

3/31/2023

$

%

Revenue

                   

Semi

$18,833

57.8

%

$16,409

55.5

%

$2,424

 

14.8

%

$17,683

55.4

%

$1,150

 

6.5

%

Industrial

2,806

8.6

%

2,930

9.9

%

(124

)

-4.2

%

3,137

9.8

%

(331

)

-10.6

%

Auto/EV

1,542

4.7

%

3,594

12.2

%

(2,052

)

-57.1

%

2,597

8.1

%

(1,055

)

-40.6

%

Life Sciences

1,135

3.5

%

1,169

3.9

%

(34

)

-2.9

%

1,513

4.8

%

(378

)

-25.0

%

Defense/Aerospace

3,890

11.9

%

1,423

4.8

%

2,467

 

173.4

%

2,839

8.9

%

1,051

 

37.0

%

Security

936

2.9

%

794

2.7

%

142

 

17.9

%

966

3.0

%

(30

)

-3.1

%

Other

3,416

10.6

%

3,252

11.0

%

164

 

5.0

%

3,184

10.0

%

232

 

7.3

%

 

$32,558

100.0

%

$29,571

100.0

%

$2,987

 

10.1

%

$31,919

100.0

%

$639

 

2.0

%

                       

Orders by Market

(In thousands)

(Unaudited)

($ in 000s)

Three Months Ended

     

Change

 

Change

 

6/30/2023

6/30/2022

$

%

3/31/2023

$

%

Orders

             

Semi

$14,721

46.9

%

$26,732

66.0

%

$(12,011

)

-44.9

%

$18,346

59.5

%

$(3,625

)

-19.8

%

Industrial

5,756

18.3

%

2,366

5.8

%

3,390

 

143.3

%

4,142

13.5

%

1,614

 

39.0

%

Auto/EV

3,276

10.4

%

2,750

6.8

%

526

 

19.1

%

2,044

6.6

%

1,232

 

60.3

%

Life Sciences

609

1.9

%

1,535

3.8

%

(926

)

-60.3

%

1,936

6.3

%

(1,327

)

-68.5

%

Defense/Aerospace

3,216

10.2

%

1,897

4.7

%

1,319

 

69.5

%

1,977

6.4

%

1,239

 

62.7

%

Security

456

1.5

%

989

2.4

%

(533

)

-53.9

%

212

0.7

%

244

 

115.1

%

Other

3,397

10.8

%

4,249

10.5

%

(852

)

-20.1

%

2,167

7.0

%

1,230

 

56.8

%

 

$31,431

100.0

%

$40,518

100.0

%

$(9,087

)

-22.4

%

$30,824

100.0

%

$607

 

2.0

 

%

 

inTEST CORPORATION

Segment Data

(In thousands)

(Unaudited)

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

Electronic Test

$ 10,993

 

 

$ 9,797

 

 

$ 21,364

 

 

$ 18,575

 

Environmental Technologies

8,136

 

 

7,507

 

 

16,178

 

 

14,500

 

Process Technologies

13,429

 

 

12,267

 

 

26,935

 

 

20,577

 

Total Revenue

$32,558

 

 

$ 29,571

 

 

$ 64,477

 

 

$ 53,652

 

 

 

 

 

 

 

 

 

 

 

 

 

Division operating income:

 

 

 

 

 

 

 

 

 

 

 

Electronic Test

$ 2,641

 

 

$ 2,193

 

 

$ 5,219

 

 

$ 4,080

 

Environmental Technologies

943

 

 

1,070

 

 

1,956

 

 

1,872

 

Process Technologies

2,592

 

 

2,569

 

 

5,268

 

 

3,299

 

Total division operating income

6,176

 

 

5,832

 

 

12,443

 

 

9,251

 

Corporate expenses

(2,309

)

 

(2,339

)

 

(4,514

)

 

(4,174

)

Acquired intangible amortization

(523

)

 

(765

)

 

(1,067

)

 

(1,547

)

Interest expense

(176

)

 

(141

)

 

(358

)

 

(278

)

Other income (expense)

197

 

 

(17

)

 

255

 

 

(27

)

Earnings before income tax expense

$ 3,365

 

 

$ 2,570

 

 

$ 6,759

 

 

$ 3,225

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

6/30/2023

 

6/30/2022

 

3/31/2023

   

 

 

 

 

Net earnings

$

2,793

 

 

$

2,116

 

 

$

2,817

 

Acquired intangible amortization

 

523

 

 

 

765

 

 

 

544

 

Tax adjustments

 

(89

)

 

 

(162

)

 

 

(92

)

Adjusted net earnings (Non-GAAP)

$

3,227

 

 

$

2,719

 

 

$

3,269

 

           

Diluted weighted average shares outstanding

 

11,697

 

 

 

10,815

 

 

 

11,089

 

Earnings per diluted share:

         

Net earnings

$

0.24

 

 

$

0.20

 

 

$

0.25

 

Acquired intangible amortization

 

0.05

 

 

 

0.07

 

 

 

0.05

 

Tax adjustments

 

(0.01

)

 

 

(0.02

)

 

 

(0.01

)

Adjusted EPS (Non-GAAP)

$

0.28

 

 

$

0.25

 

 

$

0.29

 

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

Adjusted EBITDA Margin (Non-GAAP):

 

Three Months Ended

 

6/30/2023

 

6/30/2022

 

3/31/2023

   

 

 

 

 

Net earnings

$

2,793

 

 

$

2,116

 

 

$

2,817

 

Acquired intangible amortization

 

523

 

 

 

765

 

 

 

544

 

Net interest expense

 

43

 

 

 

133

 

 

 

169

 

Income tax expense

 

572

 

 

 

454

 

 

 

577

 

Depreciation

 

259

 

 

 

174

 

 

 

245

 

Non-cash stock-based compensation

 

605

 

 

 

551

 

 

 

474

 

Adjusted EBITDA (Non-GAAP)

$

4,795

 

 

$

4,193

 

 

$

4,826

 

Revenue

 

32,558

 

 

 

29,571

 

 

 

31,919

 

Net margin

 

8.6

%

 

 

7.2

%

 

 

8.8

%

Adjusted EBITDA margin (Non-GAAP)

 

14.7

%

 

 

14.2

%

 

 

15.1

%

Reconciliation of Third Quarter 2023 Estimated Earnings Per Diluted Share to

Estimated Adjusted EPS (Non-GAAP):

 

Low

 

High

 

 

 

 

Estimated earnings per diluted share

$

0.20

 

 

$

0.24

 

Estimated acquired intangible amortization

 

0.04

 

 

 

0.04

 

Estimated tax adjustments

 

(0.01

)

 

 

(0.01

)

Estimated adjusted EPS (Non-GAAP)

$

0.23

 

 

$

0.27

 

 

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

Source: inTEST Corporation