Fourth quarter operating expenses are expected to run at approximately $10.7 million to $10.9 million. This estimated level of quarterly expense includes intangible asset amortization, which is expected to be approximately $560,000 pre-tax, or approximately $465,000 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.
Fourth quarter 2022 EPS (GAAP) is expected to be in the range of $0.20 to $0.25 while adjusted EPS (Non-GAAP) 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 (412) 317-6026. 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, November 11, 2022. To listen to the archived call, dial (412) 317-6671 and enter replay pin number 10171527 or access the webcast replay via the Company’s website. A transcript will also be posted to the website 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 which include 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
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 (loss), adjusted earnings (loss) per diluted share, adjusted EBITDA, and adjusted EBITDA margin. Organic revenue is derived by excluding revenue generated by acquired businesses in the first twelve months of ownership from total revenue. Adjusted net earnings (loss) is derived by adding acquired intangible amortization, adjusted for the related income tax expense (benefit), to net earnings (loss). Adjusted earnings (loss) per diluted share is derived by dividing adjusted net earnings (loss) by diluted weighted average shares outstanding. Adjusted EBITDA is derived by adding acquired intangible amortization, interest expense, income tax expense, depreciation, and stock-based compensation expense to net earnings (loss). 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 (loss) and adjusted earnings (loss) per diluted share are non-GAAP financial measures presented to provide investors with meaningful, supplemental information regarding our baseline performance before acquired intangible amortization charges as 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 these expenses may not be indicative of our underlying operating performance. 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 (loss) and earnings (loss) per diluted share to adjusted net earnings (loss) and adjusted earnings (loss) per diluted share and from net earnings (loss) to adjusted EBITDA and adjusted EBITDA margin, are contained in the tables below. The non-GAAP financial measures discussed in this press 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.
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 “believes,” “expects,” “intends,” “may,” “will,” “should,” “plans,” “projects,” “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, 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.
– FINANCIAL TABLES FOLLOW –
inTEST CORPORATION Consolidated Statements of Operations (In thousands, except share and per share data) (Unaudited) |
|||||||||||||||
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
||||||||||
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Revenue |
|
$ |
30,771 |
|
|
$ |
21,144 |
|
|
$ |
84,423 |
|
|
$ |
62,520 |
| Cost of revenue |
|
|
16,873 |
|
|
|
10,749 |
|
|
|
45,964 |
|
|
|
31,642 |
| Gross profit |
|
|
13,898 |
|
|
|
10,395 |
|
|
|
38,459 |
|
|
|
30,878 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Selling expense |
|
|
4,009 |
|
|
|
2,841 |
|
|
|
11,498 |
|
|
|
7,849 |
| Engineering and product development expense |
|
|
1,866 |
|
|
|
1,334 |
|
|
|
5,649 |
|
|
|
4,012 |
| General and administrative expense |
|
|
4,864 |
|
|
|
3,620 |
|
|
|
14,623 |
|
|
|
10,550 |
| Restructuring and other charges |
|
|
- |
|
|
|
51 |
|
|
|
- |
|
|
|
303 |
| Total operating expenses |
|
|
10,739 |
|
|
|
7,846 |
|
|
|
31,770 |
|
|
|
22,714 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating income |
|
|
3,159 |
|
|
|
2,549 |
|
|
|
6,689 |
|
|
|
8,164 |
| Other income (expense) |
|
|
(120 |
) |
|
|
(17 |
) |
|
|
(425 |
) |
|
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Earnings before income tax expense |
|
|
3,039 |
|
|
|
2,532 |
|
|
|
6,264 |
|
|
|
8,166 |
| Income tax expense |
|
|
515 |
|
|
|
357 |
|
|
|
1,047 |
|
|
|
1,170 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net earnings |
|
$ |
2,524 |
|
|
$ |
2,175 |
|
|
$ |
5,217 |
|
|
$ |
6,996 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Earnings per common share - basic |
|
$ |
0.24 |
|
|
$ |
0.21 |
|
|
$ |
0.49 |
|
|
$ |
0.67 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted average common shares outstanding - basic |
|
|
10,695,867 |
|
|
|
10,496,188 |
|
|
|
10,655,469 |
|
|
|
10,422,851 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Earnings per common share - diluted |
|
$ |
0.23 |
|
|
$ |
0.20 |
|
|
$ |
0.48 |
|
|
$ |
0.65 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted average common shares and common share equivalents outstanding - diluted |
|
|
10,864,540 |
|
|
|
10,792,290 |
|
|
|
10,840,644 |
|
|
|
10,694,351 |
| inTEST CORPORATION Consolidated Balance Sheets (In thousands) |
||||||||
|
|
|
September 30, |
|
|
December 31, |
|
||
|
|
|
2022 |
|
|
2021 |
|
||
| ASSETS |
|
(Unaudited) |
|
|
|
|
|
|
| Current assets: |
|
|
|
|
|
|
|
|
| Cash and cash equivalents |
|
$ |
8,901 |
|
|
$ |
21,195 |
|
| Restricted cash |
|
|
1,137 |
|
|
|
- |
|
| Short term investments |
|
|
3,494 |
|
|
|
- |
|
| Trade accounts receivable, net of allowance for doubtful accounts of $209 and $213, respectively |
|
|
21,134 |
|
|
|
16,536 |
|
| Inventories |
|
|
21,092 |
|
|
|
12,863 |
|
| Prepaid expenses and other current assets |
|
|
1,871 |
|
|
|
1,483 |
|
| Total current assets |
|
|
57,629 |
|
|
|
52,077 |
|
| Property and equipment: |
|
|
|
|
|
|
|
|
| Machinery and equipment |
|
|
6,334 |
|
|
|
5,733 |
|
| Leasehold improvements |
|
|
3,217 |
|
|
|
3,001 |
|
| Gross property and equipment |
|
|
9,551 |
|
|
|
8,734 |
|
| Less: accumulated depreciation |
|
|
(6,482 |
) |
|
|
(6,046 |
) |
| Net property and equipment |
|
|
3,069 |
|
|
|
2,688 |
|
| Right-of-use assets, net |
|
|
5,017 |
|
|
|
5,919 |
|
| Goodwill |
|
|
21,394 |
|
|
|
21,448 |
|
| Intangible assets, net |
|
|
18,894 |
|
|
|
21,634 |
|
| Restricted certificates of deposit |
|
|
100 |
|
|
|
100 |
|
| Other assets |
|
|
598 |
|
|
|
39 |
|
| Total assets |
|
$ |
106,701 |
|
|
$ |
103,905 |
|
|
|
|
|
|
|
|
|
|
|
| LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
| Current liabilities: |
|
|
|
|
|
|
|
|
| Current portion of Term Note |
|
$ |
4,100 |
|
|
$ |
4,100 |
|
| Current portion of operating lease liabilities |
|
|
1,430 |
|
|
|
1,371 |
|
| Accounts payable |
|
|
8,183 |
|
|
|
4,281 |
|
| Accrued wages and benefits |
|
|
3,537 |
|
|
|
4,080 |
|
| Accrued professional fees |
|
|
886 |
|
|
|
1,048 |
|
| Customer deposits and deferred revenue |
|
|
5,077 |
|
|
|
6,038 |
|
| Accrued sales commissions |
|
|
1,164 |
|
|
|
863 |
|
| Domestic and foreign income taxes payable |
|
|
1,335 |
|
|
|
2,024 |
|
| Other current liabilities |
|
|
1,386 |
|
|
|
1,267 |
|
| Total current liabilities |
|
|
27,098 |
|
|
|
25,072 |
|
| Operating lease liabilities, net of current portion |
|
|
4,196 |
|
|
|
5,248 |
|
| Term Note, net of current portion |
|
|
13,067 |
|
|
|
16,000 |
|
| Deferred tax liabilities |
|
|
217 |
|
|
|
1,379 |
|
| Contingent consideration |
|
|
1,238 |
|
|
|
930 |
|
| Other liabilities |
|
|
464 |
|
|
|
453 |
|
| Total liabilities |
|
|
46,280 |
|
|
|
49,082 |
|
| 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; 11,057,858 and 10,910,460 shares issued, respectively |
|
|
111 |
|
|
|
109 |
|
| Additional paid-in capital |
|
|
31,516 |
|
|
|
29,931 |
|
| Retained earnings |
|
|
29,610 |
|
|
|
24,393 |
|
| Accumulated other comprehensive earnings (loss) |
|
|
(602 |
) |
|
|
594 |
|
| Treasury stock, at cost; 34,308 and 33,077 shares, respectively |
|
|
(214 |
) |
|
|
(204 |
) |
| Total stockholders' equity |
|
|
60,421 |
|
|
|
54,823 |
|
| Total liabilities and stockholders' equity |
|
$ |
106,701 |
|
|
$ |
103,905 |
|
| inTEST CORPORATION Consolidated Statements of Cash Flows (In thousands) (Unaudited) |
|||||||
|
|
|
Nine Months Ended
|
|||||
|
|
|
2022 |
|
|
2021 |
||
| CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
|
| Net earnings |
|
$ |
5,217 |
|
|
$ |
6,996 |
| Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: |
|
|
|
|
|
|
|
| Depreciation and amortization |
|
|
3,674 |
|
|
|
2,166 |
| Provision for excess and obsolete inventory |
|
|
307 |
|
|
|
154 |
| Foreign exchange loss |
|
|
107 |
|
|
|
36 |
| Amortization of deferred compensation related to stock-based awards |
|
|
1,373 |
|
|
|
1,094 |
| Discount on shares sold under Employee Stock Purchase Plan |
|
|
28 |
|
|
|
- |
| Loss on disposal of property and equipment |
|
|
45 |
|
|
|
20 |
| Deferred income tax benefit |
|
|
(1,162 |
) |
|
|
(221) |
| Changes in assets and liabilities: |
|
|
|
|
|
|
|
| Trade accounts receivable |
|
|
(4,900 |
) |
|
|
(3,874) |
| Inventories |
|
|
(8,549 |
) |
|
|
(2,051) |
| Prepaid expenses and other current assets |
|
|
(907 |
) |
|
|
(26) |
| Restricted certificates of deposit |
|
|
- |
|
|
|
40 |
| Other assets |
|
|
(1 |
) |
|
|
(10) |
| Operating lease liabilities |
|
|
(1,064 |
) |
|
|
(918) |
| Accounts payable |
|
|
3,947 |
|
|
|
1,425 |
| Accrued wages and benefits |
|
|
(527 |
) |
|
|
942 |
| Accrued professional fees |
|
|
(153 |
) |
|
|
52 |
| Customer deposits and deferred revenue |
|
|
(827 |
) |
|
|
1,697 |
| Accrued sales commissions |
|
|
310 |
|
|
|
366 |
| Domestic and foreign income taxes payable |
|
|
(672 |
) |
|
|
302 |
| Other current liabilities |
|
|
35 |
|
|
|
(60) |
| Other liabilities |
|
|
61 |
|
|
|
(7) |
| Net cash provided by (used in) operating activities |
|
|
(3,658 |
) |
|
|
8,123 |
|
|
|
|
|
|
|
|
|
| CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
|
| Refund of final working capital adjustment related to Acculogic |
|
|
371 |
|
|
|
- |
| Purchase of property and equipment |
|
|
(1,043 |
) |
|
|
(577) |
| Purchase of short-term investments |
|
|
(3,494 |
) |
|
|
- |
| Net cash used in investing activities |
|
|
(4,166 |
) |
|
|
(577) |
|
|
|
|
|
|
|
|
|
| CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
| Repayments of Term Note |
|
|
(2,933 |
) |
|
|
- |
| Proceeds from stock options exercised |
|
|
38 |
|
|
|
1,019 |
| Proceeds from shares sold under Employee Stock Purchase Plan |
|
|
148 |
|
|
|
- |
| Shares redeemed into treasury stock |
|
|
(10 |
) |
|
|
- |
| Net cash provided by (used in) financing activities |
|
|
(2,757 |
) |
|
|
1,019 |
|
|
|
|
|
|
|
|
|
| Effects of exchange rates on cash |
|
|
(576 |
) |
|
|
(99) |
|
|
|
|
|
|
|
|
|
| Net cash provided by (used in) all activities |
|
|
(11,157 |
) |
|
|
8,466 |
| Cash, cash equivalents and restricted cash at beginning of period |
|
|
21,195 |
|
|
|
10,277 |
| Cash, cash equivalents and restricted cash at end of period |
|
$ |
10,038 |
|
|
$ |
18,743 |
|
|
|
|
|
|
|
|
|
| Cash payments for: |
|
|
|
|
|
|
|
| Domestic and foreign income taxes |
|
$ |
2,926 |
|
|
$ |
1,053 |
| inTEST CORPORATION Revenue by Market (In thousands) (Unaudited) |
||||||||||||||||||||||||||||||||
| ($ in 000s) |
Three Months Ended |
|||||||||||||||||||||||||||||||
| Change |
Change |
|||||||||||||||||||||||||||||||
| 9/30/2022 |
6/30/2022 |
$ |
% |
9/30/2021 |
$ |
% |
||||||||||||||||||||||||||
| Revenue |
||||||||||||||||||||||||||||||||
| Semi |
$ |
19,170 |
62.3 |
% |
$ |
16,409 |
55.5 |
% |
$ |
2,761 |
|
16.8 |
% |
$ |
13,656 |
64.6 |
% |
$ |
5,514 |
|
40.4 |
% |
||||||||||
| Industrial |
|
2,130 |
6.9 |
% |
|
2,930 |
9.9 |
% |
|
(800 |
) |
-27.3 |
% |
|
2,191 |
10.4 |
% |
|
(61 |
) |
-2.8 |
% |
||||||||||
| Auto/EV |
|
1,621 |
5.3 |
% |
|
3,594 |
12.2 |
% |
|
(1,973 |
) |
-54.9 |
% |
|
1,339 |
6.3 |
% |
|
282 |
|
21.1 |
% |
||||||||||
| Life Sciences |
|
1,715 |
5.6 |
% |
|
1,169 |
3.9 |
% |
|
546 |
|
46.7 |
% |
|
715 |
3.4 |
% |
|
1,000 |
|
139.9 |
% |
||||||||||
| Defense/Aerospace |
|
1,914 |
6.2 |
% |
|
1,423 |
4.8 |
% |
|
491 |
|
34.5 |
% |
|
947 |
4.5 |
% |
|
967 |
|
102.1 |
% |
||||||||||
| Security |
|
871 |
2.8 |
% |
|
794 |
2.7 |
% |
|
77 |
|
9.7 |
% |
|
6 |
0.0 |
% |
|
865 |
|
NM |
|||||||||||
| Other |
|
3,350 |
10.9 |
% |
|
3,252 |
11.0 |
% |
|
98 |
|
3.0 |
% |
|
2,290 |
10.8 |
% |
|
1,060 |
|
46.3 |
% |
||||||||||
| $ |
30,771 |
100.0 |
% |
$ |
29,571 |
100.0 |
% |
$ |
1,200 |
|
4.1 |
% |
$ |
21,144 |
100.00 |
% |
$ |
9,627 |
|
45.5 |
% |
|||||||||||
| NM: not meaningful |
||||||||||||||||||||||||||||||||
| Orders by Market (In thousands) (Unaudited) |
||||||||||||||||||||||||||||||||
| ($ in 000s) |
Three Months Ended |
|||||||||||||||||||||||||||||||
| Change |
Change |
|||||||||||||||||||||||||||||||
| 9/30/2022 |
6/30/2022 |
$ |
% |
9/30/2021 |
$ |
% |
||||||||||||||||||||||||||
| Orders |
||||||||||||||||||||||||||||||||
| Semi |
$ |
19,181 |
58.7 |
% |
$ |
26,732 |
66.0 |
% |
$ |
(7,551 |
) |
-28.2 |
% |
$ |
13.365 |
63.2 |
% |
$ |
5,816 |
|
43.5 |
% |
||||||||||
| Industrial |
|
2,309 |
7.1 |
% |
|
2,366 |
5.8 |
% |
|
(57 |
) |
-2.4 |
% |
|
2,329 |
11.0 |
% |
|
(20 |
) |
-0.9 |
% |
||||||||||
| Auto/EV |
|
2,870 |
8.8 |
% |
|
2,750 |
6.8 |
% |
|
120 |
|
4.4 |
% |
|
2,161 |
10.2 |
% |
|
709 |
|
32.8 |
% |
||||||||||
| Life Sciences |
|
927 |
2.8 |
% |
|
1,535 |
3.8 |
% |
|
(608 |
) |
-39.6 |
% |
|
195 |
0.9 |
% |
|
732 |
|
375.4 |
% |
||||||||||
| Defense/Aerospace |
|
3,149 |
9.6 |
% |
|
1,897 |
4.7 |
% |
|
1,252 |
|
66.0 |
% |
|
1,174 |
5.6 |
% |
|
1,975 |
|
168.2 |
% |
||||||||||
| Security |
|
1,072 |
3.3 |
% |
|
989 |
2.4 |
% |
|
83 |
|
8.4 |
% |
|
71 |
0.3 |
% |
|
1,001 |
|
NM |
|||||||||||
| Other |
|
3,172 |
9.7 |
% |
|
4,249 |
10.5 |
% |
|
(1,077 |
) |
-25.3 |
% |
|
1,853 |
8.8 |
% |
|
1,319 |
|
71.2 |
% |
||||||||||
| $ |
32,680 |
100.0 |
% |
$ |
40,518 |
100.0 |
% |
$ |
(7,838 |
) |
-19.3 |
% |
$ |
21,148 |
100.0 |
% |
$ |
11,532 |
|
54.5 |
% |
|||||||||||
| NM: not meaningful |
||||||||||||||||||||||||||||||||
inTEST CORPORATION
