Compared with the trailing fourth quarter of 2021, sales to the semi industry grew 9% driven primarily by demand from back-end semi applications. Life sciences, industrial and defense/aero markets also improved sequentially.
The contraction of gross margin compared with the prior-year and trailing quarter reflected less favorable product mix, impact of the acquisitions, production inefficiencies driven by supply chain constraints and delayed recovery of cost increases as pricing improvements tend to lag inflationary increases in component material and labor costs for pre-existing order commitments.
Mr. Grant noted, “We are continuously implementing improvements in our operations to take out costs and drive productivity gains. Just recently, we completed the consolidation of Videology North America operations into our Mansfield, MA facility, which also houses Environmental Technologies. This consolidation takes out costs and reduces our manufacturing footprint while upgrading facilities for that business. At our Ambrell facility, we have established dedicated production cells to address the growing demand for our induction heating solutions used in silicon carbide crystal growth applications. The cell manufacturing process is driving improved production flow and operational efficiencies as we ramp up volume. Ultimately as we grow, the anticipated increase in volume throughout our operations is expected to provide greater opportunity for capturing operating leverage.”
Compared with the first quarter of 2021, operating expenses were up $3.3 million to $10.2 million, or 42.4% of total revenue. Sequentially, operating expenses were up approximately $160,000. First quarter 2022 operating expenses reflect the impact of a full quarter of operating expenses associated with the Company’s fourth quarter acquisitions and included approximately $780,000 of intangible asset amortization expense.
Balance Sheet and Cash Flow Review
Cash and cash equivalents at the end of the first quarter of 2022 were $17.2 million, down $4.0 million, or 19%, from December 31, 2021. Debt was $19.2 million compared to $20.1 million at the end of 2021. During the first quarter of 2022, the Company used $2.7 million in cash from operations.
Capital expenditures in the quarter were $335,000 compared with $388,000 in the prior-year period.
First Quarter 2022 Orders and Backlog
($ in 000s) |
Three Months Ended |
|||||||||
Change |
Change |
|||||||||
3/31/2022 |
12/31/2021 |
$ |
% |
3/31/2021 |
$ |
% |
||||
Orders |
$ 25,063 |
$ 30,459 |
$ (5,396) |
-17.7% |
$ 25,230 |
$ (167) |
-0.7% |
|||
Backlog (at quarter end) |
$ 35,034 |
|
$ 34,052 |
|
$ 982 |
2.9% |
$ 17,139 |
|
$ 17,895 |
104.4% |
Orders for the first quarter of 2022 reflected strong demand from the automotive industry, in particular for EV applications requiring inTEST’s induction heating technology and its newly acquired battery test solutions. Orders were up in life sciences as well, driven by demand for a variety of inTEST’s technology solutions including digital imaging and induction heating. Demand from the defense/aero industry for environmental technology solutions was also strong in the quarter.
For semi-related business, orders declined compared with atypically strong demand in both the first quarter and the fourth quarter of 2021. Customer demand for back-end solutions was exceptionally strong in the first half of 2021 and the Company received a record $10 million order for front-end semi solutions in the fourth quarter of 2021.
Backlog reached a record $35.0 million at March 31, 2022.
2022 Outlook Remains Unchanged Despite Macroeconomic Environment and
Supply Chain Challenges
inTEST continues to expect 2022 revenue to grow 30% or more over the prior year to approximately $110 million to $115 million.
Gross margin for the remainder of 2022 is expected to be between 46% to 49% in any given quarter based on volume and mix while quarterly operating expenses are now expected to range from approximately $10.9 million to $11.2 million. These estimated expenses include intangible asset amortization, which is now expected to be approximately $780,000 in the second quarter.
Interest expense is expected to be approximately $150,000 per quarter and the effective tax rate is expected to be approximately 15% to 17% for the year. Capital expenditures for the year are expected to remain approximately 1% to 2% of revenue.
Second quarter 2022 revenue is expected to be in the range of $27 million to $29 million. Second quarter 2022 earnings per diluted share (GAAP) is expected to be in the range of $0.11 to $0.16 while adjusted earnings per diluted share (Non-GAAP) is expected to be in the range of $0.18 to $0.23. 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.
The foregoing guidance is based on management’s current views with respect to operating and market conditions and customers’ forecasts. It also assumes supply chain challenges remain unchanged and begin to improve modestly in the second half 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.
