inTEST Reports 4% Revenue Growth for Second Quarter 2024

Second quarter orders of $26.2 million, including $3.2 million in orders attributable to the acquisition, declined 17% versus the prior-year period, but improved 15%, or $3.4 million, compared with the first quarter of 2024. The year-over-year decline reflects general softness across most markets including $3.7 million, or 25%, lower orders from the semi market. Orders from the industrial market were down $2.3 million, or 40%, against a strong comparable. Excluding the acquisition in both quarters, the 10%, or $2.0 million, sequential improvement reflects increases in back-end semi, industrial, life sciences, security and other markets more than offsetting weakness in automotive/EV.

Backlog at June 30, 2024, was $47.7 million and included $16.3 million of backlog associated with the acquisition. Approximately 50% of the backlog is expected to ship beyond the third quarter of 2024.

Third Quarter and Full Year 2024 Outlook

Revenue for the third quarter of 2024 is expected to be slightly lower than the second quarter while gross margin is expected to improve somewhat based on better mix. Third quarter 2024 operating expenses, including amortization, are expected to be similar to the second quarter. Intangible asset amortization is expected to be approximately $0.9 million pre-tax, or approximately $0.7 million after tax. Interest expense is expected to be approximately $220,000 for the quarter.

Third quarter 2024 EPS and adjusted EPS (Non-GAAP)2 are expected to be similar to the second quarter based on the same number of weighted average shares.

Including first half 2024 results, the Company has updated its full year 2024 expectations as follows:

(As of August 2, 2024)

Updated Guidance

Previous Guidance

Revenue

$128 million to $133 million

$140 million to $150 million

Gross margin

42% to 43%

44% to 46%

Operating expenses

$53 million to $54 million

$56 million to $58 million

Intangible asset amort expense

Approximately $3.3 million

Approximately $5 million

Intangible asset amort exp. After tax

Approximately $2.7 million

Approximately $4.1 million

Effective tax rate

17% to 19%

17% to 19%

Capital expenditures

1% to 2% of sales

1% to 2% of sales

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 intest.com/investor-relations.

A telephonic replay will be available from 12:30 p.m. ET on the day of the call through Friday, August 9, 2024. To listen to the archived call, dial (412) 317-6671 and enter replay pin number 13746896. The webcast replay can be accessed via the investor relations section of 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.

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