SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
the Securities Exchange Act of 1934
(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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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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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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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: |
/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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for immediate release
Solid Execution of inTEST’s 5-Point Strategy Drove
Record Fourth Quarter and Full Year 2022 Revenue
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Record fourth quarter revenue of $32.4 million increased 45% while record full year 2022 revenue of $116.8 million increased 38% versus the prior year |
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Fourth quarter earnings per diluted share were $0.30 and full year 2022 earnings per diluted share were $0.78 |
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Fourth quarter orders of $31.3 million increased 3% versus the prior-year period, while full year 2022 orders of $129.6 million increased 27% versus the prior year |
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Strong demand in semiconductor, automotive including electric vehicles (“EV”), defense/aerospace, and life sciences resulted in record annual orders of $129.6 million |
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Q1 2023 revenue expected to be in the range of $30 million to $32 million; full year 2023 revenue expected to be in the range of $125 million to $130 million |
MT. LAUREL, NJ, March 3, 2023 -- inTEST Corporation (NYSE American: INTT), a global supplier of innovative test and process solutions for use in manufacturing and testing in key target markets which include automotive, defense/aerospace, industrial, life sciences, security, and semiconductor (“semi”), today announced financial results for the fourth quarter and year ended December 31, 2022. Results include the impact of the following acquisitions: North Sciences, formerly Z-Sciences (October 2021), Videology (October 2021) and Acculogic (December 2021).
Nick Grant, President and CEO, commented, “Solid execution of our 5-Point Strategy to drive growth enabled us to end this past year with a record $117 million in revenue. By expanding our addressable markets, building out our sales channels, upgrading our talent and staffing, and driving innovation with new products, we have expanded our geographic reach, our customer base, and market positions. Further demonstrating the success of our strategy, we integrated three acquisitions that added new technologies and deepened our positions in target markets.”
5-Point Strategy Drove Growth
The Company is focused on the execution of its 5-Point Strategy that it initiated in 2021. inTEST’s goal is to further diversify the business while accelerating growth. The elements of the strategy are:
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Global and market expansion; |
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Innovation and differentiation; |
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Service and support; |
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Talent and culture; and |
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Strategic acquisitions and partnerships. |
The Company saw growth in revenue across all its served markets in 2022 compared to the prior year. This growth was fueled both by end market demand for inTEST’s highly engineered technology solutions as well as the impact of acquisitions. The Company’s revenue from its semi business grew 24.5% in 2022 to $68.4 million, which was driven by induction heating solutions for silicon carbide (SiC) crystal production. Sales of the Company’s highly engineered solutions for automotive/electric vehicle (EV) grew 73.7% to $10.8 million for 2022. The acquired businesses contributed significantly to the revenue increases in industrial, automotive/EV, life sciences, defense/aerospace, and security.
Mr. Grant continued, “I am exceptionally proud of our global team, who delivered the outstanding results for 2022. By executing on our strategy, we are driving a culture of greater openness, collaboration and accountability across the organization which enabled us to overcome many supply chain challenges throughout the year and deliver on our commitments to our customers. We are executing on our vision to be the supplier of choice for innovative test and process technology solutions globally.”
Fourth Quarter 2022 Review (see revenue by market and by segments in accompanying tables)
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Three Months Ended |
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($ in 000s) |
Change |
Change |
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12/31/2022 |
9/30/2022 |
$ |
% |
12/31/2021 |
$ |
% |
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Revenue |
$ | 32,405 | $ | 30,771 | $ | 1,634 | 5.3 | % | $ | 22,358 | $ | 10,047 | 44.9 | % | ||||||||||||||
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Gross profit |
$ | 14,981 | $ | 13,898 | $ | 1,083 | 7.8 | % | $ | 10,346 | $ | 4,635 | 44.8 | % | ||||||||||||||
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Gross margin |
46.2 | % | 45.2 | % | 46.3 | % | ||||||||||||||||||||||
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Operating expenses (incl. intangible amort.) |
$ | 10,949 | $ | 10,739 | $ | 210 | 2.0 | % | $ | 10,051 | $ | 898 | 8.9 | % | ||||||||||||||
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Operating income |
$ | 4,032 | $ | 3,159 | $ | 873 | 27.6 | % | $ | 295 | $ | 3,737 | 1266.8 | % | ||||||||||||||
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Operating margin |
12.4 | % | 10.3 | % | 1.3 | % | ||||||||||||||||||||||
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Net earnings |
$ | 3,244 | $ | 2,524 | $ | 720 | 28.5 | % | $ | 287 | $ | 2,957 | 1030.3 | % | ||||||||||||||
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Earnings per diluted share (“EPS”) |
$ | 0.30 | $ | 0.23 | $ | 0.07 | 30.4 | % | $ | 0.03 | $ | 0.27 | 900.0 | % | ||||||||||||||
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Adjusted net earnings (Non-GAAP) (1) |
$ | 3,707 | $ | 3,016 | $ | 691 | 22.9 | % | $ | 799 | $ | 2,908 | 364.0 | % | ||||||||||||||
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Adjusted EPS (Non-GAAP) (1) |
$ | 0.34 | $ | 0.28 | $ | 0.06 | 21.4 | % | $ | 0.07 | $ | 0.27 | 385.7 | % | ||||||||||||||
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Adjusted EBITDA (Non-GAAP) (1) |
$ | 5,256 | $ | 4,453 | $ | 803 | 18.0 | % | $ | 1,368 | $ | 3,888 | 284.2 | % | ||||||||||||||
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Adjusted EBITDA margin (Non-GAAP) (1) |
16.2 | % | 14.5 | % | 6.1 | % | ||||||||||||||||||||||
(1) Adjusted net earnings, adjusted EPS, adjusted EBITDA, adjusted EBITDA margin and organic revenue 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 grew $10.0 million, driven by organic revenue (Non-GAAP)(1) growth of $6.3 million. Revenue growth reflected strong demand across all technology offerings and end markets. Demand for induction heating technology solutions for silicon carbide (SiC) crystal growth applications, as well as back-end test solutions for analog and mixed signal applications drove sales to the semi market up 58.4% to $19.5 million.
Compared with the third quarter of 2022, fourth quarter sales to the semi market grew 1.5%, due to continued strength in demand for solutions serving silicon carbide (SiC) crystal growth applications. Revenue increased sequentially to the automotive/EV and defense/aerospace markets by 73.0% and 13.7%, respectively. All the Company’s technology platforms serve these markets.
Gross margin increased by 100 basis points on a sequential basis primarily due to higher volume and beneficial product mix. Sequentially, operating income grew 27.6% to $4.0 million and operating margin expanded 210 basis points driven by operating leverage as the business scales.
Net earnings for the fourth quarter were $3.2 million, or $0.30 per diluted share. Adjusted net earnings (Non-GAAP)(1) were $3.7 million, or $0.34 per diluted share. Adjusted EBITDA (Non-GAAP)(1) was $5.3 million, representing a 16.2% adjusted EBITDA margin (Non-GAAP)(1).
Balance Sheet and Cash Flow Review
Cash and cash equivalents (including restricted cash) and short-term investments at the end of the fourth quarter of 2022 were $14.6 million, an increase of approximately $1.0 million from the end of the third quarter of 2022. During the quarter, the Company generated $2.3 million in cash from operations, up from $1.4 million in the third quarter. Cash used in operations for the year was $1.4 million. At quarter end, after paying down $1.0 million in debt, total debt was $16.1 million.
Capital expenditures were $0.3 million in the fourth quarter of 2022 compared with $0.4 million in the prior-year period. For the full year 2022 capital expenditures were $1.4 million, compared with $1.0 million in 2021.
Available funding under the Company’s delayed draw term loan facility is currently $30.0 million. In addition, there were no borrowings at the end of the fourth quarter of 2022 under the revolving credit facility.
Fourth Quarter 2022 Orders and Backlog (see orders by market in accompanying tables)
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($ in 000s) |
Three Months Ended |
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Change |
Change |
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12/31/2022 |
9/30/2022 |
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12/31/2021 |
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Orders |
$ | 31,315 | $ | 32,680 | $ | (1,365 | ) | -4.2 | % | $ | 30,459 | $ | 856 | 2.8 | % | |||||||||||||
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Backlog (at quarter end) |
$ | 46,800 | $ | 47,890 | $ | (1,090 | ) | -2.3 | % | $ | 34,052 | $ | 12,748 | 37.4 | % | |||||||||||||
Fourth quarter orders of $31.3 million grew 2.8% over the prior-year period reflecting increases across all end markets except in semi, which declined $6.6 million as last year’s fourth quarter benefitted from a $10.0 million front-end, long-term order. Sequentially, orders declined 4.2% driven by the timing of orders for semi and automotive/EV markets, which were partially offset by increased orders for life sciences, security and other markets.
Backlog at December 31, 2022, was $46.8 million, up 37.4% versus the prior year. Backlog declined sequentially 2.3% as supply chain constraints moderated enabling the Company to better meet customer demand. Approximately 45% of the backlog is expected to ship beyond the first quarter of 2023.
First Quarter 2023 Outlook and Full Year 2023 Goals
Mr. Grant concluded, “We have made excellent progress with our 5-Point Strategy and are optimistic that we can deliver high single-digit organic growth in 2023. While our quarterly cadence may vary, we are confident in the team and their ability to execute and deliver on our strategic goals.”
For 2023, the Company expects to deliver between $125 million to $130 million in revenue.
Gross margin in 2023 is expected to be consistent with 2022, or between 45% and 46%, while operating expenses are expected to be in the range of $44 million to $46 million. Expenses include intangible asset amortization expense which is currently estimated to be approximately $2.1 million for the full year, or approximately $1.7 million after tax.
The effective tax rate is expected to be consistent with 2022. Capital expenditures for 2023 are expected to run at approximately 1% to 2% of sales.
Revenue for the first quarter of 2023 is expected to be in the range of $30 million to $32 million with gross margin of approximately 45%.
First quarter 2023 operating expenses, including amortization, are expected to run at approximately $11.1 million to $11.3 million. Intangible asset amortization is expected to be approximately $540,000 pre-tax, or approximately $450,000 after tax. Interest expense is expected to be approximately $190,000 for the quarter and the effective tax rate is expected to be approximately 16% to 17% for the year.
First quarter 2023 EPS is expected to be in the range of $0.21 to $0.26, while adjusted EPS (Non-GAAP) (1) is expected to be in the range of $0.25 to $0.30.
The foregoing guidance is based on management’s current views with respect to operating and market conditions and customers’ forecasts. It also assumes macroeconomic conditions remain unchanged through the end of the year. Actual results may differ materially from what is provided here today as a result of, among other things, the factors described under “Forward-Looking Statements” below. Further information about non-GAAP measures can be found under “Non-GAAP Financial Measures” and the reconciliations of GAAP financial measures to non-GAAP financial measures that accompany this press release.
Conference Call and Webcast
The Company will host a conference call and webcast today at 8:30 a.m. ET. During the conference call, management will review the financial and operating results and discuss inTEST’s corporate strategy and outlook. A question-and-answer session will follow. To listen to the live call, dial (201) 689-8263. In addition, the webcast and slide presentation may be found at https://ir.intest.com.
A telephonic replay will be available from 11:30 a.m. ET on the day of the call through Friday, March 10, 2023. To listen to the archived call, dial (412) 317-6671 and enter replay pin number 13735047. 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 solutions for use in manufacturing and testing in key target markets including automotive, 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 GAAP, we also disclose non-GAAP financial measures. These non-GAAP financial measures consist of organic revenue, 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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Organic revenue for any given period is derived by excluding "acquired revenue” from total revenue for that period. Acquired revenue is revenue generated by an acquired business for months when that business was not owned for the full comparable prior period. |
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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 (loss). |
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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, 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. Organic revenue is a non-GAAP financial measure presented to provide investors the understanding of the performance of the core business excluding the contributions of acquisitions in the first twelve months of ownership. 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 revenue to organic revenue, net earnings and earnings per diluted share (EPS) to adjusted net earnings and adjusted earnings per diluted share (adjusted EPS) and from net earnings to adjusted EBITDA and adjusted EBITDA margin, are contained in the tables below.
Limitations of organic revenue, 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 U.S. 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 U.S. GAAP results in order to provide a more complete understanding of the factors and trends affecting our business.
Organic revenue, adjusted net earnings, adjusted earnings per diluted share (adjusted EPS), adjusted EBITDA, and adjusted EBITDA margin are not alternatives to revenue, net earnings, earnings per diluted share or margin as calculated and presented in accordance with U.S. GAAP. As such, they should not be considered or relied upon as substitutes or alternatives for any such U.S. GAAP financial measure. We strongly urge you to review the reconciliations of organic revenue, 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 organic revenue, adjusted net earnings, adjusted earnings per diluted share (adjusted EPS), adjusted EBITDA, and adjusted EBITDA margin are not measures of financial performance under U.S. GAAP and are susceptible to varying calculations, the organic revenue, 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 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 “expects,” “may,” “will,” “should,” “plans,” “potential,” “forecasts,” “outlook,” “anticipates,” “targets,” “estimates,” “goal,” 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; the impact of the COVID-19 pandemic on the Company’s business, liquidity, financial condition and results of operations; 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, 2021. 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 |
Kei Advisors LLC |
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Tel: (856) 505-8999 |
dpawlowski@keiadvisors.com |
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Tel: (716) 843-3908 |
– FINANCIAL TABLES FOLLOW –
inTEST CORPORATION
Consolidated Statements of Operations
(In thousands, except share and per share data)
(Unaudited)
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Three Months Ended |
Years Ended |
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2022 |
2021 |
2022 |
2021 |
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Revenue |
$ | 32,405 | $ | 22,358 | $ | 116,828 | $ | 84,878 | ||||||||
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Cost of revenue |
17,424 | 12,012 | 63,388 | 43,654 | ||||||||||||
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Gross profit |
14,981 | 10,346 | 53,440 | 41,224 | ||||||||||||
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Operating expenses: |
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Selling expense |
4,405 | 3,234 | 15,903 | 11,083 | ||||||||||||
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Engineering and product development expense |
1,880 | 1,519 | 7,529 | 5,531 | ||||||||||||
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General and administrative expense |
4,664 | 5,315 | 19,287 | 15,865 | ||||||||||||
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Restructuring and other charges |
- | (17 |
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- | 286 | |||||||||||
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Total operating expenses |
10,949 | 10,051 | 42,719 | 32,765 | ||||||||||||
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Operating income |
4,032 | 295 | 10,721 | 8,459 | ||||||||||||
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Other expense |
(151 |
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(59 |
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(576 |
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(57 |
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Earnings before income tax expense |
3,881 | 236 | 10,145 | 8,402 | ||||||||||||
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Income tax expense (benefit) |
637 | (51 |
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1,684 | 1,119 | |||||||||||
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Net earnings |
$ | 3,244 | $ | 287 | $ | 8,461 | $ | 7,283 | ||||||||
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Earnings per common share - basic |
$ | 0.30 | $ | 0.03 | $ | 0.79 | $ | 0.70 | ||||||||
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Weighted average common shares outstanding - basic |
10,725,662 | 10,580,431 | 10,673,017 | 10,462,246 | ||||||||||||
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Earnings per common share - diluted |
$ | 0.30 | $ | 0.03 | $ | 0.78 | $ | 0.68 | ||||||||
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Weighted average common shares and common share equivalents outstanding - diluted |
10,928,220 | 10,836,396 | 10,862,538 | 10,729,862 | ||||||||||||
inTEST CORPORATION
Consolidated Balance Sheets
(In thousands)
(Unaudited)
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December 31, |
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2022 |
2021 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ | 13,434 | $ | 21,195 | ||||
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Restricted cash |
1,142 | - | ||||||
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Trade accounts receivable, net of allowance for doubtful accounts |
21,215 | 16,536 | ||||||
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Inventories |
22,565 | 12,863 | ||||||
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Prepaid expenses and other current assets |
1,695 | 1,483 | ||||||
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Total current assets |
60,051 | 52,077 | ||||||
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Property and equipment: |
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Machinery and equipment |
6,625 | 5,733 | ||||||
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Leasehold improvements |
3,242 | 3,001 | ||||||
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Gross property and equipment |
9,867 | 8,734 | ||||||
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Less: accumulated depreciation |
(6,735 |
) |
(6,046 |
) |
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Net property and equipment |
3,132 | 2,688 | ||||||
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Right-of-use assets, net |
5,770 | 5,919 | ||||||
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Goodwill |
21,605 | 21,448 | ||||||
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Intangible assets, net |
18,559 | 21,634 | ||||||
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Deferred tax assets |
280 | - | ||||||
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Restricted certificates of deposit |
100 | 100 | ||||||
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Other assets |
569 | 39 | ||||||
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Total assets |
$ | 110,066 | $ | 103,905 | ||||
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current liabilities: |
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Current portion of Term Note |
$ | 4,100 | $ | 4,100 | ||||
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Current portion of operating lease liabilities |
1,645 | 1,371 | ||||||
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Accounts payable |
7,394 | 4,281 | ||||||
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Accrued wages and benefits |
3,907 | 4,080 | ||||||
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Accrued professional fees |
884 | 1,048 | ||||||
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Customer deposits and deferred revenue |
4,498 | 6,038 | ||||||
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Accrued sales commission |
1,468 | 863 | ||||||
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Domestic and foreign income taxes payable |
1,409 | 2,024 | ||||||
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Other current liabilities |
1,564 | 1,267 | ||||||
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Total current liabilities |
26,869 | 25,072 | ||||||
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Operating lease liabilities, net of current portion |
4,705 | 5,248 | ||||||
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Term Note, net of current portion |
12,042 | 16,000 | ||||||
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Deferred tax liabilities |
- | 1,379 | ||||||
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Contingent consideration |
1,039 | 930 | ||||||
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Other liabilities |
455 | 453 | ||||||
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Total liabilities |
45,110 | 49,082 | ||||||
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Commitments and Contingencies (Note 14) |
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Stockholders' equity: |
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Preferred stock, $0.01 par value; 5,000,000 shares authorized; no shares issued or outstanding |
- | - | ||||||
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Common stock, $0.01 par value; 20,000,000 shares authorized; 11,063,271 and 10,910,460 shares issued, respectively |
111 | 109 | ||||||
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Additional paid-in capital |
31,987 | 29,931 | ||||||
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Retained earnings |
32,854 | 24,393 | ||||||
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Accumulated other comprehensive earnings |
218 | 594 | ||||||
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Treasury stock, at cost; 34,308 and 33,077 shares, respectively |
(214 |
) |
(204 |
) |
||||
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Total stockholders' equity |
64,956 | 54,823 | ||||||
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Total liabilities and stockholders' equity |
$ | 110,066 | $ | 103,905 | ||||
inTEST CORPORATION
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
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Years Ended |
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2022 |
2021 |
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CASH FLOWS FROM OPERATING ACTIVITIES |
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Net earnings |
$ | 8,461 | $ | 7,283 | ||||
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Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: |
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Depreciation and amortization |
4,734 | 3,145 | ||||||
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Provision for excess and obsolete inventory |
771 | 203 | ||||||
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Foreign exchange loss |
109 | 34 | ||||||
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Amortization of deferred compensation related to stock-based awards |
1,787 | 1,450 | ||||||
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Discount on shares sold under Employee Stock Purchase Plan |
36 | 8 | ||||||
|
Proceeds from sale of demonstration equipment, net of gain |
68 | 145 | ||||||
|
Loss on disposal of property and equipment |
- | 50 | ||||||
|
Deferred income tax benefit |
(1,659 |
) |
(489 |
) |
||||
|
Changes in assets and liabilities: |
||||||||
|
Trade accounts receivable |
(4,886 |
) |
(4,775 |
) |
||||
|
Inventories |
(10,631 |
) |
(2,544 |
) |
||||
|
Prepaid expenses and other current assets |
(243 |
) |
(416 |
) |
||||
|
Restricted certificates of deposit |
- | 40 | ||||||
|
Other assets |
(2 |
) |
(9 |
) |
||||
|
Operating lease liabilities |
(1,363 |
) |
(1,218 |
) |
||||
|
Accounts payable |
2,875 | 1,177 | ||||||
|
Accrued wages and benefits |
(118 |
) |
1,220 | |||||
|
Accrued professional fees |
(157 |
) |
267 | |||||
|
Customer deposits and deferred revenue |
(1,464 |
) |
4,755 | |||||
|
Accrued sales commission |
621 | 280 | ||||||
|
Domestic and foreign income taxes payable |
(573 |
) |
301 | |||||
|
Other current liabilities |
184 | (59 |
) |
|||||
|
Other liabilities |
61 | (6 |
) |
|||||
|
Net cash provided by (used in) operating activities |
(1,389 |
) |
10,842 | |||||
|
CASH FLOWS FROM INVESTING ACTIVITIES |
||||||||
|
Acquisitions of businesses, net of cash acquired |
- | (20,378 |
) |
|||||
|
Payment of contingent consideration related to Z-Sciences acquisition |
(179 |
) |
- | |||||
|
Refund of final working capital adjustment related to Acculogic |
371 | - | ||||||
|
Purchase of property and equipment |
(1,365 |
) |
(994 |
) |
||||
|
Purchase of short term investments |
(3,494 |
) |
- | |||||
|
Sales of short term investments |
3,494 | - | ||||||
|
Net cash used in investing activities |
(1,173 |
) |
(21,372 |
) |
||||
|
CASH FLOWS FROM FINANCING ACTIVITIES |
||||||||
|
Proceeds from Term Note |
- | 20,500 | ||||||
|
Repayments of Term Note |
(3,958 |
) |
(400 |
) |
||||
|
Proceeds from stock options exercised |
38 | 1,582 | ||||||
|
Proceeds from shares sold under Employee Stock Purchase Plan |
197 | 43 | ||||||
|
Acquisition of treasury stock-shares surrendered by employees to satisfy tax liability |
(10 |
) |
- | |||||
|
Net cash provided by (used in) financing activities |
(3,733 |
) |
21,725 | |||||
|
Effects of exchange rates on cash |
(324 |
) |
(277 |
) |
||||
|
Net cash provided by (used in) all activities |
(6,619 |
) |
10,918 | |||||
|
Cash, cash equivalents and restricted cash at beginning of period |
21,195 | 10,277 | ||||||
|
Cash, cash equivalents and restricted cash at end of period |
$ | 14,576 | $ | 21,195 | ||||
|
Cash payments for: |
||||||||
|
Domestic and foreign income taxes |
$ | 3,924 | $ | 1,322 | ||||
|
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: |
||||||||
|
Issuance of unvested shares of restricted stock |
$ | 1,138 | $ | 1,541 | ||||
|
Forfeiture of unvested shares of restricted stock |
(54 |
) |
(164 |
) |
||||
|
Details of acquisitions: |
||||||||
|
Fair value of assets acquired, net of cash |
$ | (49 |
) |
$ | 17,717 | |||
|
Liabilities assumed |
- | (3,849 |
) |
|||||
|
Contingent consideration |
500 | (1,109 |
) |
|||||
|
Goodwill resulting from acquisitions |
(451 |
) |
7,619 | |||||
|
Net cash paid for acquisitions |
$ | - | $ | 20,378 | ||||
inTEST CORPORATION
Revenue by Market
(In thousands)
(Unaudited)
|
($ in 000s) |
Three Months Ended |
|||||||||||||||||||||||||||||||||||||||
|
Change |
Change |
|||||||||||||||||||||||||||||||||||||||
|
12/31/2022 |
9/30/2022 |
$ |
% |
12/31/2021 |
$ |
% |
||||||||||||||||||||||||||||||||||
|
Revenue |
||||||||||||||||||||||||||||||||||||||||
|
Semi |
$ | 19,453 | 60.0 | % | $ | 19,170 | 62.3 | % | $ | 283 | 1.5 | % | $ | 12,284 | 54,9 | % | $ | 7,169 | 58.4 | % | ||||||||||||||||||||
|
Industrial |
2,179 | 6.7 | % | 2,130 | 6.9 | % | 49 | 2.3 | % | 2,172 | 9.7 | % | 7 | 0.3 | % | |||||||||||||||||||||||||
|
Auto/EV |
2,805 | 8.7 | % | 1,621 | 5.3 | % | 1,184 | 73.0 | % | 2,697 | 12.1 | % | 108 | 4.0 | % | |||||||||||||||||||||||||
|
Life Sciences |
1,006 | 3.1 | % | 1,715 | 5.6 | % | (709 | ) | -41.3 | % | 409 | 1.8 | % | 597 | 146.0 | % | ||||||||||||||||||||||||
|
Defense/Aerospace |
2,176 | 6.7 | % | 1,914 | 6.2 | % | 262 | 13.7 | % | 1,322 | 5.9 | % | 854 | 64.6 | % | |||||||||||||||||||||||||
|
Security |
1,002 | 3.1 | % | 871 | 2.8 | % | 131 | 15.0 | % | 693 | 3.1 | % | 309 | 44.6 | % | |||||||||||||||||||||||||
|
Other |
3,784 | 11.7 | % | 3,350 | 10.9 | % | 434 | 13.0 | % | 2,781 | 12.5 | % | 1,003 | 36.1 | % | |||||||||||||||||||||||||
| $ | 32,405 | 100.0 | % | $ | 30,771 | 100.0 | % | $ | 1,634 | 5.3 | % | $ | 22,358 | 100.00 | % | $ | 10,047 | 44.9 | % | |||||||||||||||||||||
|
($ in 000s) |
Years Ended |
|||||||||||||||||||||||
|
Change |
||||||||||||||||||||||||
|
12/31/2022 |
12/31/2021 |
$ |
% |
|||||||||||||||||||||
|
Revenue |
||||||||||||||||||||||||
|
Semi |
$ | 68,422 | 58.6 | % | $ | 54,937 | 64.7 | % | $ | 13,485 | 24.5 | % | ||||||||||||
|
Industrial |
10,038 | 8.6 | % | 7,314 | 8.6 | % | 2,724 | 37.2 | % | |||||||||||||||
|
Auto/EV |
10,776 | 9.2 | % | 6,205 | 7.3 | % | 4,571 | 73.7 | % | |||||||||||||||
|
Life Sciences |
4,589 | 3.9 | % | 2,353 | 2.8 | % | 2,236 | 95.0 | % | |||||||||||||||
|
Defense/Aerospace |
7,006 | 6.0 | % | 5,043 | 6.0 | % | 1,963 | 38.9 | % | |||||||||||||||
|
Security |
3,241 | 2.8 | % | 699 | 0.8 | % | 2,542 | 363.7 | % | |||||||||||||||
|
Other |
12,756 | 10.9 | % | 8,327 | 9.8 | % | 4,429 | 53.2 | % | |||||||||||||||
| $ | 116,828 | 100.0 | % | $ | 84,878 | 100.0 | % | $ | 31,950 | 37.6 | % | |||||||||||||
inTEST CORPORATION
Orders by Market
(In thousands)
(Unaudited)
|
($ in 000s) |
Three Months Ended |
|||||||||||||||||||||||||||||||||||||||
|
Change |
Change |
|||||||||||||||||||||||||||||||||||||||
|
12/31/2022 |
9/30/2022 |
$ |
% |
12/31/2021 |
$ |
% |
||||||||||||||||||||||||||||||||||
|
Orders |
||||||||||||||||||||||||||||||||||||||||
|
Semi |
$ | 14,775 | 47.2 | % | $ | 19,181 | 58.7 | % | $ | (4,406 | ) | -23.0 | % | $ | 21,386 | 70.2 | % | $ | (6,611 | ) | -30.9 | % | ||||||||||||||||||
|
Industrial |
2,657 | 8.5 | % | 2,309 | 7.1 | % | 348 | 15.1 | % | 2,504 | 8.2 | % | 153 | 6.1 | % | |||||||||||||||||||||||||
|
Auto/EV |
1,660 | 5.3 | % | 2,870 | 8.8 | % | (1,210 | ) | -42.2 | % | 1,413 | 4.7 | % | 247 | 17.5 | % | ||||||||||||||||||||||||
|
Life Sciences |
2,027 | 6.5 | % | 927 | 2.8 | % | 1,100 | 118.7 | % | 654 | 2.2 | % | 1,373 | 209.9 | % | |||||||||||||||||||||||||
|
Defense/Aerospace |
3,364 | 10.7 | % | 3,149 | 9.6 | % | 215 | 6.8 | % | 862 | 2.8 | % | 2,502 | 290.3 | % | |||||||||||||||||||||||||
|
Security |
2,172 | 6.9 | % | 1,072 | 3.3 | % | 1,100 | 102.6 | % | 1,620 | 5.3 | % | 552 | 34.1 | % | |||||||||||||||||||||||||
|
Other |
4,660 | 14.9 | % | 3,172 | 9.7 | % | 1,488 | 46.9 | % | 2,020 | 6.6 | % | 2,640 | 130.7 | % | |||||||||||||||||||||||||
| $ | 31,315 | 100.0 | % | $ | 32,680 | 100.0 | % | $ | (1,365 | ) | -4.2 | % | $ | 30,459 | 100.0 | % | $ | 856 | 2.8 | % | ||||||||||||||||||||
|
($ in 000s) |
Years Ended |
|||||||||||||||||||||||
|
Change |
||||||||||||||||||||||||
|
12/31/2022 |
12/31/2021 |
$ |
% |
|||||||||||||||||||||
|
Orders |
||||||||||||||||||||||||
|
Semi |
$ | 73,070 | 56.4 | % | $ | 68,464 | 67.2 | % | $ | 4,606 | 6.7 | % | ||||||||||||
|
Industrial |
10,554 | 8.2 | % | 9,001 | 8.8 | % | 1,553 | 17.3 | % | |||||||||||||||
|
Auto/EV |
9,899 | 7.6 | % | 7,466 | 7.3 | % | 2,433 | 32.6 | % | |||||||||||||||
|
Life Sciences |
5,705 | 4.4 | % | 2,413 | 2.4 | % | 3,292 | 136.4 | % | |||||||||||||||
|
Defense/Aerospace |
10,261 | 7.9 | % | 4,904 | 4.8 | % | 5,357 | 109.2 | % | |||||||||||||||
|
Security |
4,386 | 3.4 | % | 1,691 | 1.7 | % | 2,695 | 159.4 | % | |||||||||||||||
|
Other |
15,701 | 12.1 | % | 8,003 | 7.8 | % | 7,698 | 96.2 | % | |||||||||||||||
| $ | 129,576 | 100.0 | % | $ | 101,942 | 100.0 | % | $ | 27,634 | 27.1 | % | |||||||||||||
inTEST CORPORATION
Segment Data
(In thousands)
(Unaudited)
Beginning in the first quarter of 2022, the Company made a change to its reportable segments from two reportable segments to three reportable segments – Electronic Test, Environmental Technologies and Process Technologies. These segments, which operate as Divisions, align with how the Chief Executive Officer (CEO) who is also the Chief Operating Decision Maker (CODM) as defined under U.S. GAAP, allocates resources and assesses performance against the Company’s key growth strategies. Prior period reportable segment results and related disclosures have been restated to be consistent with the current year presentation.
|
Three Months Ended December 31, |
Years Ended December 31, |
|||||||||||||||
|
2022 |
2021 |
2022 |
2021 |
|||||||||||||
|
Revenue: |
||||||||||||||||
|
Electronic Test |
$ | 11,236 | $ | 6,851 | $ | 40,219 | $ | 32,509 | ||||||||
|
Environmental Technologies |
8,041 | 7,176 | 30,172 | 26,896 | ||||||||||||
|
Process Technologies |
13,128 | 8,331 | 46,437 | 25,473 | ||||||||||||
|
Total Revenue |
$ | 32,405 | $ | 22,358 | $ | 116,828 | $ | 84,878 | ||||||||
|
Division operating income: |
||||||||||||||||
|
Electronic Test |
$ | 3,445 | $ | 2,068 | $ | 9,931 | $ | 10,926 | ||||||||
|
Environmental Technologies |
924 | 1,110 | 3,817 | 4,236 | ||||||||||||
|
Process Technologies |
2,466 | 1,124 | 8,230 | 3,819 | ||||||||||||
|
Total division operating income |
6,835 | 4,302 | 21,978 | 18,981 | ||||||||||||
|
Corporate expenses |
(2,251 |
) |
(3,485 |
) |
(8,563 |
) |
(9,082 |
) |
||||||||
|
Acquired intangible amortization |
(552 |
) |
(522 |
) |
(2,694 |
) |
(1,440 |
) |
||||||||
|
Other income (expense) |
(151 |
) |
(59 |
) |
(576 |
) |
(57 |
) |
||||||||
|
Earnings before income tax expense |
$ | 3,881 | $ | 236 | $ | 10,145 | $ | 8,402 | ||||||||
Reconciliation of Non-GAAP Financial Measures
(In thousands, except percentage data)
(Unaudited)
Reconciliation of Revenue to Organic Revenue (Non-GAAP):
|
Three Months Ended |
||||||||||||||||
|
Change |
||||||||||||||||
|
12/31/2022 |
12/31/2021 |
$ |
% |
|||||||||||||
|
Total revenue |
$ | 32,405 | $ | 22,358 | $ | 10,047 | 44.9 | % | ||||||||
|
Less: Acquired Revenue(1) |
(3,778 | ) | n/a | |||||||||||||
|
Organic revenue (Non-GAAP) |
$ | 28,627 | $ | 22,358 | $ | 6,269 | 28.0 | % | ||||||||
|
(1) |
Acquired businesses consist of Acculogic (December 2021), Videology (October 2021) and North Sciences (October 2021). The calculation of organic revenue excludes from current period revenue any Acquired Revenue. Acquired Revenue is revenue from any acquired business for months where that business was not owned for the full comparable prior period. |
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 Share – Diluted to Adjusted Earnings Per Share – Diluted (Non-GAAP):
|
Three Months Ended |
||||||||||||
|
12/31/2022 |
12/31/2021 |
9/30/2022 |
||||||||||
|
Net earnings |
$ | 3,244 | $ | 287 | $ | 2,524 | ||||||
|
Acquired intangible amortization |
552 | 522 | 595 | |||||||||
|
Tax adjustments |
(89 | ) | (10 | ) | (103 | ) | ||||||
|
Adjusted net earnings (Non-GAAP) |
$ | 3,707 | $ | 799 | $ | 3,016 | ||||||
|
Diluted weighted average shares outstanding |
10,928 | 10,836 | 10,865 | |||||||||
|
Earnings per share – diluted: |
||||||||||||
|
Net earnings |
$ | 0.30 | $ | 0.03 | $ | 0.23 | ||||||
|
Acquired intangible amortization |
0.05 | 0.04 | 0.06 | |||||||||
|
Tax adjustments |
(0.01 | ) | - | (0.01 | ) | |||||||
|
Adjusted earnings per share – diluted (Non-GAAP) |
$ | 0.34 | $ | 0.07 | $ | 0.28 | ||||||
|
Years Ended |
||||||||
|
12/31/2022 |
12/31/2021 |
|||||||
|
Net earnings |
$ | 8,461 | $ | 7,283 | ||||
|
Acquired intangible amortization |
2,694 | 1,440 | ||||||
|
Tax adjustments |
(447 | ) | (22 | ) | ||||
|
Adjusted net earnings (Non-GAAP) |
$ | 10,708 | $ | 8,701 | ||||
|
Diluted weighted average shares outstanding |
10,863 | 10,730 | ||||||
|
Earnings per share – diluted: |
||||||||
|
Net earnings |
$ | 0.78 | $ | 0.68 | ||||
|
Acquired intangible amortization |
0.25 | 0.13 | ||||||
|
Tax adjustments |
(0.04 | ) | - | |||||
|
Adjusted earnings per share – diluted (Non-GAAP) |
$ | 0.99 | $ | 0.81 | ||||
Reconciliation of Net Earnings to Adjusted EBITDA (Non-GAAP) and
Adjusted EBITDA Margin (Non-GAAP):
|
Three Months Ended |
||||||||||||
|
12/31/2022 |
12/31/2021 |
9/30/2022 |
||||||||||
|
Net earnings |
$ | 3,244 | $ | 287 | $ | 2,524 | ||||||
|
Acquired intangible amortization |
552 | 522 | 595 | |||||||||
|
Interest expense |
164 | 83 | 166 | |||||||||
|
Income tax expense (benefit) |
637 | (51 | ) | 515 | ||||||||
|
Depreciation |
245 | 171 | 203 | |||||||||
|
Non-cash stock-based compensation |
414 | 356 | 450 | |||||||||
|
Adjusted EBITDA (Non-GAAP) |
$ | 5,256 | $ | 1,368 | $ | 4,453 | ||||||
|
Revenue |
32,405 | 22,358 | 30,771 | |||||||||
|
Adjusted EBITDA margin (Non-GAAP) |
16.2 | % | 6.1 | % | 14.5 | % | ||||||
|
Years Ended |
||||||||
|
12/31/2022 |
12/31/2021 |
|||||||
|
Net earnings |
$ | 8,461 | $ | 7,283 | ||||
|
Acquired intangible amortization |
2,694 | 1,440 | ||||||
|
Interest expense |
600 | 89 | ||||||
|
Income tax expense |
1,684 | 1,119 | ||||||
|
Depreciation |
810 | 666 | ||||||
|
Non-cash stock-based compensation |
1,787 | 1,450 | ||||||
|
Adjusted EBITDA (Non-GAAP) |
$ | 16,036 | $ | 12,047 | ||||
|
Revenue |
116,828 | 84,878 | ||||||
|
Adjusted EBITDA margin (Non-GAAP) |
13.7 | % | 14.2 | % | ||||
Reconciliation of First Quarter 2023 Estimated Earnings Per Share – Diluted to
Estimated Adjusted Earnings Per Share – Diluted (Non-GAAP):
|
Low |
High |
|||||||
|
Estimated earnings per share – diluted |
$ | 0.21 | $ | 0.26 | ||||
|
Estimated acquired intangible amortization |
0.05 | 0.05 | ||||||
|
Estimated tax adjustments |
(0.01 | ) | (0.01 | ) | ||||
|
Estimated adjusted earnings per share – diluted (Non-GAAP) |
$ | 0.25 | $ | 0.30 | ||||
###