inTEST Corporation (AMEX:INTT) Q1 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call presents a mixed picture with several negative factors outweighing the positives. While there is growth in certain markets and a strong cash position, the company faces significant challenges, including a decline in revenue, engineering delays, tariff impacts, and economic uncertainty. The Q&A session revealed concerns about visibility, break-even levels, and management's lack of clarity on key metrics. Despite some positive developments like increased orders and debt repayment, the overall sentiment leans negative due to the substantial hurdles and uncertainties highlighted.
Key Financial Performance
Revenue $26.6 million, down $3.2 million (10.7%) year-over-year due to a $4.3 million increase in sales to auto/EV, life sciences, and other markets being offset by a $6 million reduction in semi and a $1.2 million decline in industrial.
Gross Profit $11.1 million, down $2 million year-over-year due to lower sales volume and unfavorable mix.
Gross Margin 41.5%, down 230 basis points year-over-year primarily due to lower fixed cost absorption and less favorable mix.
Operating Expenses $13.9 million, up $1.3 million year-over-year, including $300,000 in restructuring costs and $1.3 million of incremental operating expenses related to Alfamation.
Net Loss $2.3 million, or a loss of $0.19 per diluted share.
Adjusted Net Loss $1.4 million, or a loss of $0.11 per diluted share, reflecting adjustments for acquired intangible amortization charges and restructuring costs.
Adjusted EBITDA Negative $900,000.
Cash Generated from Operations $5.5 million.
Free Cash Flow $5.3 million.
Total Debt $11.8 million, down $3.2 million from the previous quarter.
Cash and Equivalents $22 million, up 11% or $2.2 million from the trailing quarter.
Backlog $38.2 million, down $17.2 million year-over-year.
Orders Increased 11% year-over-year, with industrial demand growing 47%.
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Operating Highlights
New Products Sales: New products represented sales of $4.5 million, approximately 17% of total sales, with a goal to increase this to 25% in the coming years.
Market Expansion: Plans to begin manufacturing in a new facility in Malaysia during the second half of 2025, aimed at better serving the Southeast Asia region.
Operational Efficiencies: Implemented tight cost controls, eliminated discretionary spending, restricted hiring, and leveraged government programs to supplement employee wages during reduced work periods.
Debt Reduction: Reduced debt by more than $3 million to strengthen the balance sheet.
Strategic Shifts: Focus on geographic expansion and innovation as part of the VISION 2030 growth strategy, aiming for greater scale and operational excellence.
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Risk or Challenges
Macroeconomic Turmoil: The company is facing challenges due to macroeconomic turmoil and market uncertainty, which have impacted customer spending and overall sales.
Engineering Challenges: Delays in customer spending were exacerbated by engineering challenges in the Environmental Technologies division, resulting in approximately $1.5 million of shipments being pushed out of the quarter.
Tariff Impacts: The company is assessing the impacts of shifting tariff policies on both supply chain and market competitiveness, with potential cost increases that may need to be passed on to customers.
Supply Chain Challenges: While the company has localized its supply chain, it still faces challenges related to tariffs and sourcing materials, particularly from China, which could affect costs and pricing.
Customer Reevaluation of Projects: Due to geopolitical tensions and trade policy volatility, customers are reevaluating the timing of their capital projects and shipment delivery schedules, leading to uncertainty in order fulfillment.
Market Demand Fluctuations: The company has experienced fluctuations in demand across various sectors, particularly a decline in semi and industrial markets, which has affected overall revenue.
Operational Costs: In response to current market conditions, the company has implemented cost controls and reduced discretionary spending, which may impact operational flexibility.
Economic Uncertainty: The overall economic uncertainty, particularly related to tariffs, makes future revenue predictions less predictable, impacting guidance for the upcoming quarters.
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Guidance & Outlook
New Product Sales: New products represented sales of $4.5 million, approximately 17% of total sales, with a goal to increase this to 25% by 2030.
Manufacturing Expansion: Plans to begin manufacturing in Malaysia during the second half of 2025 to better serve the Southeast Asia region.
Cost Control Measures: Implemented tight cost controls, eliminated discretionary spending, and restricted hiring to improve profitability.
VISION 2030 Strategy: Focus on driving innovation, geographic expansion, and operational excellence for long-term growth.
Q2 Revenue Guidance: Forecasted revenue for Q2 is between $27 million to $29 million.
Gross Margin Guidance: Expected gross margin for Q2 is approximately 42%.
Operating Expenses Guidance: Operating expenses for Q2 are projected to be between $13 million to $13.5 million, excluding restructuring expenses.
Long-term Outlook: Despite current uncertainties, the company is confident in long-term fundamentals and market position.
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Shareholder Return Plan
Debt Repayment: During the quarter, we repaid approximately $3.2 million of debt.
Cash Generation: We generated $5.5 million of cash from operations.
Free Cash Flow: The resultant free cash flow was $5.3 million.
Cash Position: Cash and equivalents at the end of the first quarter were $22 million, up 11% or $2.2 million from the trailing quarter.
Available Liquidity: We have more than sufficient liquidity given our cash position and the $30 million available with our delayed draw term loan and an incremental $10 million available under our revolver.
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Key Q&A
Q:When did visibility get a little cloudier in the second half?
A:We started to see customer slowdown and order pushouts in the mid-quarter.
Q:Is the potential swing factor primarily the semi space?
A:Semi and auto are the biggest potential swing factors, with a healthy pipeline in both industries.
Q:How should we think about the break-even quarterly revenue level now with the new cost structure?
A:The break-even point is around $30 million, but we are bringing that down slightly.
Q:What industry segment is the $1.5 million order from a returning customer in?
A:The order is in the utility space, specifically for induction heating systems.
Q:How do they utilize the induction heating?
A:They heat the utility poles to precondition the welds for improved quality and increased yields.
Q:Was the engineering delay on new product introductions or existing products?
A:The delays were on new products, with some existing and some new customers affected.
Q:Can you quantify the customer pipeline?
A:We typically don’t project order numbers, but the opportunity funnel is at a record high.
Q:Can we get the last year of segment data disclosure?
A:We will consider providing that data as the year progresses.
Q:Review of Unclear Management Responses
A:Management did not provide specific numbers for the customer pipeline or segment data disclosure, which lacked clarity.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Alfamation Safety
Alfamation backlog
Alfamation financials
Amortization interest
Backlog Alfamation
Canada exposure
China sale
EV life
InTest
Investor Relations
Slide tariff
Transcript Greetings
auto EV
balance
baseline
chart
deal
decline step
division
engineering
front
generation
impact
loss share
manufacturing strategy
market condition
order customer
production
restructuring Slide
safety security
sale auto
sale supply
sale volume
site
source
spend
trade environment
visibility
world
INTT Transcript
inTEST Corporation (INTT) Q3 2025 Earnings Call Transcript
Unknown11-5
The earnings call reveals mixed signals: strong order growth in key sectors and successful diversification efforts are positive, but revenue and gross profit declines, limited market recovery visibility, and flat guidance despite resolved challenges are concerning. The Q&A section highlights management's confidence, yet lacks clarity on guidance adjustments. Market conditions remain weak, especially in the semi sector, and margin declines further temper optimism. Overall, the sentiment remains neutral as positive long-term fundamentals balance short-term uncertainties and financial performance issues.
inTEST Corporation (INTT) Q2 2025 Earnings Call Transcript
Unknown8-6
The earnings call shows mixed signals. Basic financial performance is weak due to net losses, but cost-saving measures and debt reduction are positive. Product development and market strategy are promising with growth in orders and geographic expansion plans. However, uncertainties in the semi business rebound and vague guidance impact sentiment. Shareholder returns are not mentioned, and the Q&A reveals some management evasiveness. Overall, the stock is likely to remain stable, with a neutral sentiment.
inTEST Corporation (AMEX:INTT) Q1 2025 Earnings Call Transcript
Unknown5-3
The earnings call presents a mixed picture with several negative factors outweighing the positives. While there is growth in certain markets and a strong cash position, the company faces significant challenges, including a decline in revenue, engineering delays, tariff impacts, and economic uncertainty. The Q&A session revealed concerns about visibility, break-even levels, and management's lack of clarity on key metrics. Despite some positive developments like increased orders and debt repayment, the overall sentiment leans negative due to the substantial hurdles and uncertainties highlighted.
inTEST Corporation (INTT) Q1 2025 Earnings Call Transcript
Unknown5-2
The earnings call reveals several negative aspects: a decline in revenue and gross profit, increased operating expenses, and a net loss. Despite some positive developments such as cash generation and debt repayment, significant risks remain, including macroeconomic turmoil, supply chain challenges, and a backlog decline. The Q&A session highlighted uncertainties in customer demand and management's reluctance to provide specific guidance. These factors, combined with a weak semi market and engineering challenges, suggest a likely negative stock price reaction over the next two weeks.
INTT Slides
INTT Report
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